Legislature(2011 - 2012)HOUSE FINANCE 519

02/16/2012 01:30 PM FINANCE


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01:37:17 PM Start
01:39:00 PM HB283 || HB307 || DISCUSSION OF THE GOVERNOR'S FY 2013 BUDGET AMENDMENTS
02:48:36 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ NCSL Presentation: The Federal Budget Control TELECONFERENCED
Act & its Possible Economic Effects on Alaska
<Above Item Cancelled from Agenda>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 283 BUDGET: CAPITAL TELECONFERENCED
Heard & Held
+= HB 307 SUPPLEMENTAL/CAPITAL/OTHER APPROPRIATIONS TELECONFERENCED
Heard & Held
- Discussion of Governor's FY13 Budget
Amendments by Karen Rehfeld, Director,
Office of Management and Budget
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 16, 2012                                                                                          
                         1:37 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:37:17 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the House Finance Committee meeting                                                                     
to order at 1:37 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
James Armstrong,  Staff, Representative Bill  Stoltze; Karen                                                                    
Rehfeld, Director,  Office of Management and  Budget, Office                                                                    
of the Governor; Pat  Shire, Director, Enterprise Technology                                                                    
Services,   Department  of   Administration;  Laura   Achee,                                                                    
Legislative  Liaison,  Alaska  Permanent  Fund  Corporation,                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 283    BUDGET: CAPITAL                                                                                                       
                                                                                                                                
          HB 283 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HB 307    SUPPLEMENTAL/CAPITAL/OTHER APPROPRIATIONS                                                                             
                                                                                                                                
          HB 307 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
DISCUSSION OF THE GOVERNOR'S FY 2013 BUDGET AMENDMENTS:                                                                         
                                                                                                                                
          Karen Rehfeld, Director, Office of Management and                                                                     
          Budget                                                                                                                
                                                                                                                                
^DISCUSSION OF THE GOVERNOR'S FY 2013 BUDGET AMENDMENTS                                                                         
                                                                                                                                
HOUSE BILL NO. 283                                                                                                              
                                                                                                                                
     "An Act  making and amending  appropriations, including                                                                    
     capital   appropriations   and  other   appropriations;                                                                    
     making   appropriations   to  capitalize   funds;   and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
HOUSE BILL NO. 307                                                                                                            
                                                                                                                                
     "An  Act  making supplemental  appropriations,  capital                                                                    
     appropriations,  and   other  appropriations;  amending                                                                    
     appropriations;   repealing    appropriations;   making                                                                    
     appropriations to  capitalize funds; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
1:39:00 PM                                                                                                                    
                                                                                                                                
JAMES   ARMSTRONG,  STAFF,   REPRESENTATIVE  BILL   STOLTZE,                                                                    
relayed  that  amendments  had   been  incorporated  in  the                                                                    
members'  binders   and  that  an  updated   fiscal  summary                                                                    
incorporating   the  FY   12  supplemental   and  governor's                                                                    
amendments had been provided.  All legislative offices would                                                                    
continue  to   have  access   to  CAPSIS   (Capital  Project                                                                    
Submission Information  System) until  February 27,  2012 at                                                                    
5:00 p.m.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze noted that CAPSIS  was an electronic system                                                                    
for capital project submissions.                                                                                                
                                                                                                                                
Mr. Armstrong  explained that there  had been  424 different                                                                    
accounts, 1,579  projects, and $4.6 billion  entered into FY                                                                    
12 CAPSIS. Communities had finished  their FY 13 submissions                                                                    
several weeks earlier and at  the time the request total had                                                                    
been $3.8 billion.                                                                                                              
                                                                                                                                
Co-Chair  Stoltze   believed  the  total   would  ultimately                                                                    
surpass the prior year submission request total.                                                                                
                                                                                                                                
Co-Chair  Thomas asked  whether  there had  been any  harbor                                                                    
requests.  Mr.   Armstrong  would  provide  an   answer  the                                                                    
following Monday.                                                                                                               
                                                                                                                                
Co-Chair Stoltze turned the gavel over to Co-Chair Thomas.                                                                      
                                                                                                                                
1:41:49 PM                                                                                                                    
                                                                                                                                
Co-Chair  Thomas asked  for a  review of  proposed operating                                                                    
budget amendments.                                                                                                              
                                                                                                                                
KAREN REHFELD,  DIRECTOR, OFFICE  OF MANAGEMENT  AND BUDGET,                                                                    
OFFICE  OF  THE  GOVERNOR,  spoke to  the  amendments  as  a                                                                    
capital  and operating  package.  Representatives from  each                                                                    
department  were  available  to answer  specific  questions.                                                                    
The total  proposed operating and capital  budget amendments                                                                    
for  FY 13  were $34,258.3  million and  were broken  out as                                                                    
follows:                                                                                                                        
                                                                                                                                
     Unrestricted General Fund     $23,486.0 million                                                                            
                                                                                                                                
     Designated General Fund       $494.5 million                                                                               
                                                                                                                                
     Other Funds                   $2,456.6 million                                                                             
                                                                                                                                
     Federal Funds                 $7,821.2 million                                                                             
                                                                                                                                
Ms. Rehfeld detailed that capital  budget amendments made up                                                                    
$14.823.7 million of the  total $34.258.3 million; $10,943.6                                                                    
million  was   unrestricted  general  fund.   The  operating                                                                    
amendments  represented  $19.4  million of  the  total.  She                                                                    
explained  that of  the $23.5  million unrestricted  general                                                                    
fund  (operating   and  capital  combined)   request,  $10.2                                                                    
million  was  for  the  Alaska   Land  Mobile  Radio  (ALMR)                                                                    
emergency response system;  $8.7 million of the  total was a                                                                    
capital  budget request  and $1.5  million was  an operating                                                                    
budget  request. She  provided  detail related  to the  ALMR                                                                    
system:                                                                                                                         
                                                                                                                                
        · The goal of ALMR is to build a secure network                                                                         
          that will provide each agency with reliable                                                                           
          communications, which will enhance emergency                                                                          
          response, personnel safety, and operational                                                                           
          capabilities.                                                                                                         
                                                                                                                                
        · The Department of Defense (DOD) transferred                                                                           
          ownership of  13 ALMR  sites effective  January 1,                                                                    
          2012 and another  28 sites July 1 to  the State of                                                                    
          Alaska.   As  a   result,   the   state  will   be                                                                    
          responsible for  41 more sites in  addition to the                                                                    
         37 it already owns starting July 1, 2012.                                                                              
                                                                                                                                
        · A recently completed report commissioned by DOA                                                                       
          found:                                                                                                                
                                                                                                                                
             o ALMR is providing a value for users -                                                                            
               federal, state, and local                                                                                        
                                                                                                                                
             o ALMR is the best value, there are no other                                                                       
               viable alternatives                                                                                              
                                                                                                                                
        · Operating funding is necessary to perform onsite                                                                      
          preventative maintenance inspection (PMI) and                                                                         
          necessary repairs to keep sites operational.                                                                          
                                                                                                                                
Ms.  Rehfeld discussed  Department  of Administration  (DOA)                                                                    
capital budget  funding in  the amount  of $3.5  million for                                                                    
specific  hardware and  software  upgrades  for the  current                                                                    
system.                                                                                                                         
                                                                                                                                
1:45:23 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld  specified that four individual  departments had                                                                    
requested capital  funding to upgrade their  systems for the                                                                    
Federal Communications  Commission narrow  band requirements                                                                    
that would take place on  July [January] 1, 2013 [Department                                                                    
of  Public Safety  (DPS), Department  of Corrections  (DOC),                                                                    
Department of Health and  Social Services (DHSS), Department                                                                    
of Natural Resources (DNR)]. There  were two other new items                                                                    
for  DNR: (1)  program receipts  for wildland  fire-fighting                                                                    
aircraft maintenance  and; (2) statutory  designated program                                                                    
receipts for large dam projects application and review.                                                                         
                                                                                                                                
Ms.  Rehfeld  highlighted  a  $1.8  million  capital  budget                                                                    
request  from  DPS  for  Alaska  Justice  Advanced  Exchange                                                                    
program  development,  which   was  a  multi-agency  justice                                                                    
information  exchange   system  that  interfaced   with  all                                                                    
criminal justice  systems. Two items had  inadvertently been                                                                    
omitted  including $100,000  for  the  federal Help  America                                                                    
Vote Act, and the DHSS State Health Information Gateway.                                                                        
                                                                                                                                
Ms.  Rehfeld  addressed  National Petroleum  Reserve  Alaska                                                                    
grants. She  relayed that Department of  Commerce, Community                                                                    
and Economic Development (DCCED)  went through a competitive                                                                    
process  to determine  the  grant awards.  The  FY 13  award                                                                    
amount had  been slightly  revised and  was included  in the                                                                    
amendment packets. She relayed that  there had been a couple                                                                    
of   technical    corrections   to   project    titles   and                                                                    
descriptions; there had also been a scope change.                                                                               
                                                                                                                                
1:47:21 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze asked  about the  dynamics of  the federal                                                                    
government  transfer  related  to  ALMR.  He  noted  that  a                                                                    
significant  amount  of  money  had  been  invested  in  the                                                                    
system.                                                                                                                         
                                                                                                                                
Ms.  Rehfeld replied  that the  U.S.  Department of  Defense                                                                    
(DOD) had developed  ALMR and was still  a significant user,                                                                    
but the mission  had shifted. There were  some community and                                                                    
small  first  responder  locations, but  federal  and  state                                                                    
agencies  were   the  primary  users  of   the  system.  The                                                                    
Department  of   Administration  was   in  the   process  of                                                                    
developing   a  cost   share   model   that  would   require                                                                    
participation  from  the  federal  and  state  agencies.  In                                                                    
addition  to  the system  upgrades  request  in the  capital                                                                    
budget  amendment, DOD  would provide  between $4.3  million                                                                    
and $4.8 million.                                                                                                               
                                                                                                                                
Co-Chair  Stoltze   thought  that  the  transfer   was  more                                                                    
appropriately described as  a shift of costs  by the federal                                                                    
government.                                                                                                                     
                                                                                                                                
Co-Chair Thomas  wondered whether it was  possible to ensure                                                                    
that  radio  frequencies  were  locked  in  once  they  were                                                                    
designated.  Ms.  Rehfeld  deferred   the  question  to  the                                                                    
departments. She noted an answer would be provided.                                                                             
                                                                                                                                
Representative Doogan  referred to  an operating  request of                                                                    
$1.1  million  for  DOA,  an  operating  amendment  of  $1.5                                                                    
million, capital amendments of $2.9  million in DNR and $1.6                                                                    
million in  DPS. He referenced  Ms. Rehfeld's  testimony and                                                                    
asked about the fourth agency she had highlighted.                                                                              
                                                                                                                                
Ms.  Rehfeld   replied  that  the  capital   budget  request                                                                    
included  $3.5   million  for  DOA  hardware   and  software                                                                    
upgrades   for  the   system.  There   were  four   agencies                                                                    
requesting  assistance   for  the  narrow   band  compliance                                                                    
requirements  including,  $470,000  for  DOC,  $297,500  for                                                                    
DHSS, $2.960 million for DNR, and $1.470 million for DPS.                                                                       
                                                                                                                                
Representative Doogan  surmised that the total  was over $11                                                                    
million.  Ms. Rehfeld  replied there  was  $10.2 million  in                                                                    
amendments in addition to the amount in the FY 13 budget.                                                                       
                                                                                                                                
1:53:31 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg discussed  that fire  departments                                                                    
in his  district had  been unhappy about  the change  to the                                                                    
ALMR system.  He thought the  state might need  more options                                                                    
to  negotiate  with  the  federal  government.  He  wondered                                                                    
whether DOD or DPS had  a priority related to the allocation                                                                    
of costs  for the system. He  asked how DOD or  DPS would be                                                                    
impacted  if  the  system   was  discontinued.  He  wondered                                                                    
whether   the  possibility   had  been   factored  into   an                                                                    
allocation of expenses.                                                                                                         
                                                                                                                                
Ms.  Rehfeld   was  not  aware  of   a  prioritization.  She                                                                    
explained that access to the  ALMR system was vital to first                                                                    
responders. She  detailed that a  cost allocation  plan that                                                                    
recognized  some  small but  critical  users  of the  system                                                                    
would probably  not be  implemented until  the FY  14 budget                                                                    
cycle; the  plan would  work to capture  some of  the larger                                                                    
users, but not to disadvantage  smaller users. Over the last                                                                    
several years the Alaska Municipal  League (AML) and smaller                                                                    
fire  service areas  had expressed  concerns related  to the                                                                    
ability to manage costs while  remaining part of the system.                                                                    
She believed  progress had been made  and that opportunities                                                                    
would be available to all of the users.                                                                                         
                                                                                                                                
Representative Guttenberg  recognized the importance  of the                                                                    
system, but the allocation was  not available because it had                                                                    
not been  developed yet. The system  was extremely important                                                                    
for  other   users  in   addition  to   AML  and   the  fire                                                                    
departments.                                                                                                                    
                                                                                                                                
Representative   Neuman   informed    the   committee   that                                                                    
additional  information would  be provided  from the  budget                                                                    
subcommittee on the  issue. He referenced a  survey that had                                                                    
polled  25  of  the  107  users;  out  of  16,720  responses                                                                    
approximately  6,700  had been  from  DOD.  He believed  the                                                                    
issue  went  back  to  2009;  there  had  been  requests  to                                                                    
determine  how  the cost  sharing  program  would break  out                                                                    
amongst users,  which had not been  completed. He emphasized                                                                    
the importance  of obtaining the  detail on how  costs would                                                                    
split  amongst  state,  federal,  and  municipal  users.  He                                                                    
detailed  that some  municipalities were  not able  to spend                                                                    
$2,000 to $5,000 per handheld unit.                                                                                             
                                                                                                                                
1:58:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Thomas recognized the importance  of the system and                                                                    
had been working  to get a handle on the  issue for the past                                                                    
six years.                                                                                                                      
                                                                                                                                
Representative  Neuman believed  that there  was a  need for                                                                    
the program. He  expressed concern that the  system would be                                                                    
phased out  in approximately  2025 after  approximately $117                                                                    
million  was  invested.  The   subcommittee  had  asked  the                                                                    
department  about phasing  in a  new program  and the  costs                                                                    
associated with its implementation.                                                                                             
                                                                                                                                
Co-Chair Thomas noted  that six years earlier  the state did                                                                    
not have the cash it had now.                                                                                                   
                                                                                                                                
Representative Gara did not  believe that enough information                                                                    
would be  obtained during  the budget  subcommittee process.                                                                    
He was  frustrated that local emergency  responders had been                                                                    
told to purchase equipment for  the current ALMR system when                                                                    
the  administration   had  been   tasked  with   looking  at                                                                    
alternative  options.  He  believed an  analysis  on  system                                                                    
alternatives should have been  completed sooner. He wondered                                                                    
whether  the long-term  cost was  approximately $10  million                                                                    
per year until 2025.                                                                                                            
                                                                                                                                
Ms. Rehfeld replied that it would  be helpful for the DOA to                                                                    
provide  him  with  its  report  on  ALMR.  There  had  been                                                                    
significant  analysis on  the system,  which included  prior                                                                    
costs, costs going forward, and alternatives.                                                                                   
                                                                                                                                
Representative Gara  explained that during  the subcommittee                                                                    
process DOA  had told legislators that  alternatives to ALMR                                                                    
had been analyzed and were no good.                                                                                             
                                                                                                                                
2:01:21 PM                                                                                                                    
                                                                                                                                
Representative  Doogan   thought  that  the   proposed  ALMR                                                                    
funding was roughly  an 800 percent increase  from the prior                                                                    
year. Ms. Rehfeld  responded that the costs would  go to the                                                                    
four departments  mentioned earlier  in order to  bring them                                                                    
into compliance with the narrow band requirements.                                                                              
                                                                                                                                
Representative   Doogan   understood   that   the   expenses                                                                    
represented  capital  costs.  He communicated  that  nothing                                                                    
made him confident that there  would not be a similar amount                                                                    
of capital costs in the years  to come. He thought it looked                                                                    
like a financial  mistake had been made and  he wondered how                                                                    
long and  how much the  state would have  to pay for  it. He                                                                    
did  not believe  other members  of the  legislature or  the                                                                    
administration could be very happy with the situation.                                                                          
                                                                                                                                
Vice-chair  Fairclough asked  whether the  legislature could                                                                    
anticipate the need for additional  funds because the number                                                                    
of sites  would be  increased on July  1, 2012.  Ms. Rehfeld                                                                    
believed   that   upgrades   for   additional   sites   were                                                                    
incorporated into the current numbers.                                                                                          
                                                                                                                                
Vice-chair  Fairclough  asked  whether the  increased  costs                                                                    
would  be   ongoing.  Ms.   Rehfeld  answered   that  system                                                                    
operation and maintenance costs would be ongoing.                                                                               
                                                                                                                                
2:04:44 PM                                                                                                                    
                                                                                                                                
Representative Joule sited testimony  that 78 sites had been                                                                    
transferred  and  queried the  total  number  of sites.  Ms.                                                                    
Rehfeld deferred the question to other departments.                                                                             
                                                                                                                                
Representative Joule wondered how  long the transition would                                                                    
go on.                                                                                                                          
                                                                                                                                
PAT   SHIRE,  DIRECTOR,   ENTERPRISE  TECHNOLOGY   SERVICES,                                                                    
DEPARTMENT  OF ADMINISTRATION,  replied that  the state  had                                                                    
previously  owned and  maintained  37 sites.  There were  41                                                                    
additional  sites moving  to state  ownership. He  clarified                                                                    
that  most  of  the  equipment owned  by  the  military  was                                                                    
already  located   inside  state   telecommunication  system                                                                    
shelters.                                                                                                                       
                                                                                                                                
Representative Joule  asked whether  there were  other sites                                                                    
that would  be transferred in  addition to the  41 scheduled                                                                    
for transfer. Mr. Shire replied in the negative.                                                                                
                                                                                                                                
Representative Wilson  asked what would happen  if the state                                                                    
elected to not take  responsibility for the remaining sites.                                                                    
Mr. Shire answered  that studies conducted in  2009 and 2011                                                                    
indicated  that   the  system  would  become   unstable.  He                                                                    
elaborated  that  the  system  would  no  longer  be  safely                                                                    
suitable for DPS,  DOT, and the Division  of Forestry, which                                                                    
were  three  of  the  primary   daily  users;  the  troopers                                                                    
currently  used the  system for  their  daily dispatch.  The                                                                    
military  had  indicated that  it  would  turn some  of  the                                                                    
switches off so that it could  not be held responsible for a                                                                    
failure to the system.                                                                                                          
                                                                                                                                
Representative  Wilson thought  the  federal government  was                                                                    
planning to  continue using the locations;  she wondered how                                                                    
much of the system it planned on using.                                                                                         
                                                                                                                                
Mr. Shire  replied that according  to a letter  from several                                                                    
years past,  the army wanted  to continue using  the system.                                                                    
He   detailed  that   the  Military   Assistance  to   Civil                                                                    
Authorities (MACA)  program under the Stafford  Act required                                                                    
the  military to  divest  its ownership  of  the gear  while                                                                    
maintaining  use privileges  or  to discontinue  use of  the                                                                    
system if it became unstable  and did not provide items like                                                                    
security and encryption.                                                                                                        
                                                                                                                                
2:08:29 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld highlighted  items on  the "Governor's  FY 2013                                                                    
Capital Budget Amendments" spreadsheet (copy on file):                                                                          
                                                                                                                                
     · Item 1 was related to the ALMR                                                                                           
                                                                                                                                
     · Item 2 changed the title from Borough of Ketchikan                                                                       
        to "City" of Ketchikan                                                                                                  
                                                                                                                                
     · Item 3 included grant allocations under the National                                                                     
        Petroleum Reserve-Alaska; individual awards were                                                                        
        listed in the bill and the dollar amount had been                                                                       
        reduced by $503,000 based on new estimates                                                                              
                                                                                                                                
     · Item 4 reflected the ALMR compliance under DOC                                                                           
                                                                                                                                
     · Items 5 and 6 were connected to school construction                                                                      
        major maintenance  projects;  $24  million had  been                                                                    
        included  in  the  original  budget  and  a  $69,972                                                                    
        project had  been added  for K-12  school mechanical                                                                    
        and electrical upgrades                                                                                                 
                                                                                                                                
     ·  Item 7 provided funds to polling place accessibility                                                                    
        under the federal Help America Vote Act                                                                                 
                                                                                                                                
     · Item 8 funded ALMR upgrades for DHSS                                                                                     
                                                                                                                                
     ·  Item 9 added $3.6 million for  state improvements to                                                                    
        the  Health   Information   Gateway   (exchange   of                                                                    
        electronic health records), which  had inadvertently                                                                    
        been omitted from the original budget                                                                                   
                                                                                                                                
     ·  Item 10  provided  funds  to  DNR  for  narrow  band                                                                    
        requirements                                                                                                            
                                                                                                                                
     ·  Item  11  included   $500,000  in   general  program                                                                    
        receipts to  fund  wildland  fire-fighting  aircraft                                                                    
        maintenance                                                                                                             
                                                                                                                                
     ·  Item  12  used  $506,000   in  statutory  designated                                                                    
        program receipts  to  fund  the large  dam  projects                                                                    
        application review and certificates of approval; the                                                                    
        funding would allow  continued work  on Red  Dog and                                                                    
        Lynn Creek                                                                                                              
                                                                                                                                
     ·  Item 13  allocated $1.8  million  to Alaska  Justice                                                                    
        Advanced  Exchange  program  development;  the  item                                                                    
        represented  an  important  piece  of  the  criminal                                                                    
        justice system  and  allowed  different  systems  to                                                                    
        exchange information                                                                                                    
                                                                                                                                
     · Item 14 funded DPS ALMR upgrades                                                                                         
                                                                                                                                
     ·  Item 15  made a  technical correction  to a  project                                                                    
        description                                                                                                             
                                                                                                                                
     ·  Item 16 changed  the University of  Alaska Anchorage                                                                    
        (UAA) WWAMI - Lab Upgrade and Additional Space Needs                                                                    
        title to UAA Health -  Health Upgrade/Renovation and                                                                    
        Additional Space Needs                                                                                                  
                                                                                                                                
2:13:03 PM                                                                                                                    
                                                                                                                                
KAREN REHFELD,  DIRECTOR, OFFICE  OF MANAGEMENT  AND BUDGET,                                                                    
OFFICE OF  THE GOVERNOR, highlighted items  on a spreadsheet                                                                    
titled  "Governor's  FY  2013 Operating  Budget  Amendments"                                                                    
(copy  on  file).  The operating  amendments  totaled  $19.4                                                                    
million  including  $12.5  million  in  general  funds.  She                                                                    
explained the  spreadsheet included  several items  from the                                                                    
FY 12 supplemental budget that  had been reconsidered in the                                                                    
FY 13  amendments. Other items  included in  the spreadsheet                                                                    
were:                                                                                                                           
                                                                                                                                
   · $3,785.6 million for the Judicial Retirement System                                                                        
     past service costs                                                                                                         
                                                                                                                                
   · $2.0 million for Trauma Care Fund capitalization                                                                           
                                                                                                                                
   · ($2.1 million) reduction in debt service due to                                                                            
     refinancing                                                                                                                
                                                                                                                                
   · $1.5 million ALMR - operating                                                                                              
                                                                                                                                
   · Technical corrections for several items that resulted                                                                      
     in net zero changes                                                                                                        
                                                                                                                                
Ms.  Rehfeld  explained  that  there  were  a  few  proposed                                                                    
efficiency  transactions  related  to Executive  Order  116,                                                                    
which would move the DHSS  Hearing and Appeals Office to the                                                                    
DOA  Office  of  Administrative Hearings.  Other  additional                                                                    
requests  included  three   in-house  investment  management                                                                    
positions for  the Alaska Permanent Fund  Corporation (APFC)                                                                    
that  would result  in significant  savings  and a  $500,000                                                                    
request  from  the  Alaska  Mental  Health  Trust  Authority                                                                    
(AMHTA)  for a  patient centered  medical homes  competitive                                                                    
pilot project.                                                                                                                  
                                                                                                                                
2:16:15 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld  explained  that  pages 1  through  12  of  the                                                                    
spreadsheet reflected  the operating numbers  changes, pages                                                                    
12 through  14 reflected language changes,  page 14 included                                                                    
the AMHTA item,  and pages 15 through  16 included technical                                                                    
corrections. Page 1, items 1  through 6 boiled down to three                                                                    
transactions.  She explained  that  general  funds had  been                                                                    
retained in  the Administrative  Hearing Office  that needed                                                                    
to be  distributed to several  agencies; the state  paid for                                                                    
costs and agencies were billed.                                                                                                 
                                                                                                                                
Ms. Rehfeld  discussed that  items 7  and 8  on page  2 were                                                                    
related  to  the  Executive  Order   116  transfer.  Item  9                                                                    
included  $75,000 for  the DOA  Division  of Retirement  and                                                                    
Benefits.  She elaborated  that currently  the division  did                                                                    
not  have general  fund resources  for items  that were  not                                                                    
related to  retirement system funds (e.g.  management of the                                                                    
political  subdivision  health   contract,  legal  expenses,                                                                    
consultant  fees,   research  and  analysis   on  proposals,                                                                    
legislation,  and other).  Item  10 provided  funds to  DOA.                                                                    
Items 11  and 12 proposed  funding for the Office  of Public                                                                    
Advocacy (OPA)  and Public Defender Agency  (PDA) related to                                                                    
caseload  increases. Item  13 proposed  a $62,000  increment                                                                    
for  the  addition  to  the   Lower  Yukon  Alaska  Regional                                                                    
Development  Organization  (ARDOR); without  the  additional                                                                    
funding  money  provided  to the  existing  ARDOR  would  be                                                                    
diluted.                                                                                                                        
                                                                                                                                
2:19:59 PM                                                                                                                    
                                                                                                                                
Representative  Doogan  asked  whether the  absence  of  the                                                                    
increment  for  new ARDORs  would  require  any of  the  new                                                                    
organizations  to be  funded with  money designated  for the                                                                    
existing   organizations.  Ms.   Rehfeld   replied  in   the                                                                    
affirmative.  She  believed  that money  would  be  prorated                                                                    
across existing agencies if the increment was not funded.                                                                       
                                                                                                                                
Representative Neuman communicated  his understanding from a                                                                    
budget  subcommittee  that PDA  had  sealed  cases that  had                                                                    
resulted  in  a caseload  reduction  and  cost decrease.  He                                                                    
queried the  reason for  item 12  that proposed  funding for                                                                    
agency caseload increases.                                                                                                      
                                                                                                                                
Ms. Rehfeld deferred to DOA  to sort through any discrepancy                                                                    
between  the item  on the  spreadsheet and  the subcommittee                                                                    
hearings;  it  was  her  understanding  that  the  item  was                                                                    
necessary.                                                                                                                      
                                                                                                                                
Representative  Neuman indicated  his  intent  to bring  the                                                                    
issue to the committee at a later time.                                                                                         
                                                                                                                                
2:22:14 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld  moved  to  item  14  related  to  funding  for                                                                    
community jails;  funding had also  been included in  the FY                                                                    
12 supplemental budget.                                                                                                         
                                                                                                                                
Vice-chair  Fairclough  wondered  whether  there  was  a  $5                                                                    
million overhead  related to item  14. Ms.  Rehfeld referred                                                                    
the committee  to page 14 of  the backup (copy on  file) and                                                                    
replied that there was a $5,000 overhead for item 14.                                                                           
                                                                                                                                
Ms. Rehfeld discussed that item  15 included a correction to                                                                    
the  total amount  available related  to the  Permanent Fund                                                                    
Dividend  (PFD)  felon  funds  that  were  appropriated  for                                                                    
physical health care.  Item  16 addressed a transfer related                                                                    
to  the  Human  Rights  Commission  and  the  administrative                                                                    
hearings that had been discussed earlier in the meeting.                                                                        
                                                                                                                                
Vice-chair  Fairclough shared  that  she  had traveled  with                                                                    
Representative Joule  to Washington D.C. to  lobby on behalf                                                                    
of  Alaskans for  the consideration  of the  Alaska National                                                                    
Wildlife  Refuge (ANWR).  She  notified  the committee  that                                                                    
Congress had just passed an  energy bill that included ANWR;                                                                    
she appreciated  its work on  the issue. She  recognized the                                                                    
issue would be a challenge in the U.S. Senate.                                                                                  
                                                                                                                                
2:24:38 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld  pointed  to  items 17  and  18  that  proposed                                                                    
funding for the state and  tribal portions of the Low Income                                                                    
Home  Energy  Assistance  Program (LIHEAP)  and  the  Alaska                                                                    
Affordable Heating  Program; funding had also  been included                                                                    
in the  FY 12  supplemental budget in  the same  amount. The                                                                    
numbers  were expected  to  be modified  due  to winter  and                                                                    
price   changes  and   would   be   communicated  when   new                                                                    
information became available.                                                                                                   
                                                                                                                                
Co-Chair  Thomas asked  about the  total LIHEAP  amount. Ms.                                                                    
Rehfeld  responded  that  with the  proposed  amendment  the                                                                    
total FY 13 budget would be $31.7 million.                                                                                      
                                                                                                                                
Representative   Wilson  requested   a  cost   breakdown  by                                                                    
community. Ms.  Rehfeld would ask the  department to provide                                                                    
the information.                                                                                                                
                                                                                                                                
Ms.  Rehfeld moved  to item  19 that  requested $350,000  in                                                                    
program  receipts for  specialty newborn  screening clinics;                                                                    
funding had  also been  included in  the FY  12 supplemental                                                                    
budget.  She  furthered  that demand  for  the  clinics  had                                                                    
increased.  Items 20  through  22 were  all  related to  the                                                                    
transfer contemplated  in Executive  Order 116 from  DHSS to                                                                    
DOA. Item 23 included an  increase of $168,000 in designated                                                                    
general  funds   for  the  Workers'   Compensation  Benefits                                                                    
Guarantee Fund; funding had also  been included in the FY 12                                                                    
supplemental  budget   to  address  increased   legal  costs                                                                    
associated  with  the entity.  Item  24  corrected the  fund                                                                    
source from  American Recovery  and Reinvestment  Act (ARRA)                                                                    
to federal  receipts. Items  25 through  27 resulted  from a                                                                    
change in  the required match  rate for armories  in Kodiak,                                                                    
Ketchikan, and  Kenai; a proposed request  was also included                                                                    
to  continue   operations  at  the   Bethel  armory   and  a                                                                    
correction had been made to  the electrical usage at Eielson                                                                    
Air Force Base. Item 28  removed $75,000 in funding from the                                                                    
governor's request for  Interior Alaska cemetery operations,                                                                    
given that  the project had  been delayed. She  relayed that                                                                    
the costs would begin in FY 14.                                                                                                 
                                                                                                                                
2:28:18 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  believed the  time frame  for the                                                                    
cemetery funding was appropriate.                                                                                               
                                                                                                                                
Ms. Rehfeld directed  attention to item 29  that reflected a                                                                    
$143,100  decrease  in  National  Guard  and  Naval  Militia                                                                    
Retirement   System   (NGNMRS)   based  on   its   actuarial                                                                    
evaluation.  Item  30  provided  $260,000  to  DNR  for  the                                                                    
Horticultural  Evaluation Program.  She  explained that  the                                                                    
United States  Division of  Agriculture had  recently closed                                                                    
its agricultural  research service in Alaska  (materials had                                                                    
gone  to  the plant  materials  center);  the funding  would                                                                    
continue  the work  for commercial  plant  producers in  the                                                                    
state. Item  31 proposed  $75,000 for DPS  dispatch services                                                                    
in Kotzebue.  Item 32 included  $1.9 million for  the Bureau                                                                    
of Highway Patrol;  the item was related  to federal highway                                                                    
safety funds for non-DUI related activities.                                                                                    
                                                                                                                                
Ms. Rehfeld  addressed item 33  that proposed funding  for a                                                                    
transfer related  to administrative appeals. Item  34 showed                                                                    
a decrement for  DPS related to unrealizable  revenue from a                                                                    
variety of sources. Line 35  proposed a $200,000 increase in                                                                    
general  funds  to  maintain  current  services;  a  funding                                                                    
request  for  the  item  had   also  been  included  in  the                                                                    
supplemental  budget.  Item  36   included  a  transfer  for                                                                    
administrative  hearings. Item  37 removed  $120,000 related                                                                    
to a  cigarette tax  stamp; the  manufacturer had  agreed to                                                                    
delay  the increase  in price  due to  push back  from state                                                                    
governments. Item  38 moved  $77,000 in  bankcard compliance                                                                    
costs from  the language section  to the numbers  section of                                                                    
the budget. Item 39 moved  $265,300 in general funds for the                                                                    
child support  enforcement efforts 34 percent  federal match                                                                    
from the language  section to the numbers  section. Items 40                                                                    
and 41  proposed an  increment to  fund three  APFC in-house                                                                    
investment manager positions,  which would reduce management                                                                    
fees and increase efficiency.                                                                                                   
                                                                                                                                
2:32:21 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked whether item 40  would save money                                                                    
by reducing the number  of external investment managers. Ms.                                                                    
Rehfeld responded that the  APFC estimates showing potential                                                                    
savings related to the in-house  positions would be provided                                                                    
to the committee.                                                                                                               
                                                                                                                                
Representative  Guttenberg  pointed  out  that  savings  may                                                                    
occur  in  the Department  of  Law  if more  positions  were                                                                    
brought in-house.                                                                                                               
                                                                                                                                
Ms.  Rehfeld  discussed items  42  and  44 that  related  to                                                                    
insurance costs  for rural airport contracts.  An adjustment                                                                    
had been  made to how  costs were calculated,  which allowed                                                                    
for a $175,000 reduction to  the Central region and a slight                                                                    
increase of $21,300 for the Northern region.                                                                                    
                                                                                                                                
Representative  Neuman asked  about  contractor costs  under                                                                    
item  42.  He  wondered  whether the  state  had  been  over                                                                    
charging  on  leases  to independent  operators  who  rented                                                                    
space on state land. He  asked whether operators would see a                                                                    
reduction  in their  bills if  they had  been over  charged.                                                                    
Ms. Rehfeld  replied that item  42 was related  to insurance                                                                    
costs.  She would  have  the department  follow  up with  an                                                                    
answer.                                                                                                                         
                                                                                                                                
Vice-chair Fairclough referred to  costs that appeared to be                                                                    
duplicated for  salary or Cost of  Living Adjustments (COLA)                                                                    
at  APFC; the  governor had  included an  increment for  the                                                                    
item  in  the FY  13  budget  and  APFC  had also  made  the                                                                    
request.  She had  expected to  see a  reduction related  to                                                                    
APFC as a result of the duplication.                                                                                            
                                                                                                                                
LAURA  ACHEE,  LEGISLATIVE  LIAISON, ALASKA  PERMANENT  FUND                                                                    
CORPORATION, DEPARTMENT  OF REVENUE, replied that  the items                                                                    
represented two  different increases: one was  the 2 percent                                                                    
COLA that  went to all  state employees; the  other increase                                                                    
was for  the board  approved salary management  program that                                                                    
allowed APFC to fully staff  the office and to provide merit                                                                    
increases.                                                                                                                      
                                                                                                                                
Vice-chair  Fairclough  asked  for  the  information  to  be                                                                    
provided  to  the Legislative  Finance  Division  as it  was                                                                    
currently listing the items as  duplicates. Ms. Achee agreed                                                                    
to follow up with the division.                                                                                                 
                                                                                                                                
2:38:09 PM                                                                                                                    
                                                                                                                                
Ms. Rehfeld discussed that item  43 on page 10 represented a                                                                    
$121,100  increment   to  fund  a  Barrow   airport  manager                                                                    
position. She  elaborated that  Barrow was  one of  the only                                                                    
certified airports in the state  without an on-site manager.                                                                    
The  Department  of  Transportation  and  Public  Facilities                                                                    
(DOT) had  requested general funds for  an existing position                                                                    
that would be transferred to Barrow.                                                                                            
                                                                                                                                
Representative  Gara asked  for  clarification  on the  fund                                                                    
source related  to the Barrow  airport manager.  Ms. Rehfeld                                                                    
explained  that   DOT  had  a   vacant  position   that  had                                                                    
previously  been funded  by a  non-general fund  source; the                                                                    
position would  be transferred  to Barrow  and could  not be                                                                    
funded with the prior funding source.                                                                                           
                                                                                                                                
Ms. Rehfeld communicated that items  45 through 54 (pages 10                                                                    
through 12) were  related to the University  of Alaska. Item                                                                    
47  related to  a university  five-year mentoring  grant for                                                                    
urban  areas;  the  grant  totaled  $14.9  million  and  the                                                                    
university was requesting federal  receipt authority for the                                                                    
project.  Item 49  included $5  million  in federal  receipt                                                                    
authority for Pell grants; a  request in the same amount had                                                                    
also  been  included  in  the   FY  12  supplemental  budget                                                                    
request. She  explained that all  of the other  transfers in                                                                    
federal  funds   were  aligning  the   university's  federal                                                                    
authorization. She detailed that  there was a total addition                                                                    
of  $7.5  million  in  federal  authority  in  the  proposed                                                                    
amendments.                                                                                                                     
                                                                                                                                
Ms. Rehfeld highlighted  several proposed language amendment                                                                    
items on  page 12. Item  57 was related to  the catastrophic                                                                    
reserve; one section related to  sweeping certain funds into                                                                    
the reserve  at the  end of  the year  and a  second section                                                                    
that  appropriated   $5  million   into  the   reserve.  She                                                                    
explained  that the  second section  was  not necessary  and                                                                    
should  be  deleted.  Item  58   related  to  child  support                                                                    
services was deleted from the  language section and moved to                                                                    
the numbers section  of the budget. Item  59 appropriated $2                                                                    
million to the  Trauma Care Fund that  would allow hospitals                                                                    
to  complete their  work towards  becoming certified  in the                                                                    
four levels  of trauma  care. Item 60  related to  bank card                                                                    
compliance costs  was deleted from the  language section and                                                                    
moved to  the numbers section  of the budget.  The decrement                                                                    
of  $431,400  related to  NGNMRS  was  not required  at  the                                                                    
present time and  was deleted (Item 61). Item  62 added $3.7                                                                    
million  to fund  the  JRS past  service  liability per  the                                                                    
request of the  Court System; the normal cost  rates for JRS                                                                    
had been included  in the December budget.  Items 63 through                                                                    
67  related to  a reduction  in  debt service  costs due  to                                                                    
refinancing.                                                                                                                    
                                                                                                                                
2:43:51 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld directed  attention  to item  70 that  provided                                                                    
$500,000 in  funding for four  mental health  pilot programs                                                                    
with  AMHTA authorized  receipts. Pages  15 and  16 included                                                                    
very technical corrections and did  not alter any numbers in                                                                    
the budget. Item  78 was the only exception;  a decrement of                                                                    
$1.5 million in ARRA  carry-forward funds was removed, given                                                                    
that the  funds would no  longer be available after  the end                                                                    
of the year.  She added that the  carry-forward amount would                                                                    
be known  at a  later date. She  advised the  committee that                                                                    
other  budget related  documents were  available on  the OMB                                                                    
website.                                                                                                                        
                                                                                                                                
Co-Chair  Thomas  thanked  OMB   for  providing  the  backup                                                                    
materials.                                                                                                                      
                                                                                                                                
Vice-chair  Fairclough did  not see  funding included  for a                                                                    
Department of  Military and Veterans Affairs  (DMVA) program                                                                    
that would attract military veterans  with an opportunity to                                                                    
attend school free of charge.                                                                                                   
                                                                                                                                
2:47:01 PM                                                                                                                    
                                                                                                                                
Ms.  Rehfeld  replied  that the  administration  had  become                                                                    
aware  of  the issue.  She  explained  that the  educational                                                                    
benefits had been transferred to  the University of Alaska a                                                                    
few years earlier; she relayed  that the university and DMVA                                                                    
were discussing the issue.                                                                                                      
                                                                                                                                
Co-Chair  Thomas discussed  the schedule  for the  following                                                                    
week.                                                                                                                           
                                                                                                                                
HB  283  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HB  307  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:48:36 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:48 PM.                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB283-Transmittal_Letter_Capital_Amend_2-15-12.pdf HFIN 2/16/2012 1:30:00 PM
HB 283
HB283-FY13_Capital_Amendments_2-15-12-Spreadsheet.pdf HFIN 2/16/2012 1:30:00 PM
HB 283
FY13_Gov_Amended_Fiscal_Summary_2-15-12.pdf HFIN 2/16/2012 1:30:00 PM
HB 283
HB 284
HB284-Transmittal_Letter_Operating_Amend_2-15-12.pdf HFIN 2/16/2012 1:30:00 PM
HB 284
HB284-FY13_Operating_Amendments_2-15-12-Spreadsheet.pdf HFIN 2/16/2012 1:30:00 PM
HB 284