Legislature(2011 - 2012)HOUSE FINANCE 519

03/14/2012 08:30 AM FINANCE

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Moved CSHB 284(FIN) Out of Committee
Moved CSHB 285(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 14, 2012                                                                                            
                         8:51 a.m.                                                                                              
8:51:40 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Thomas called the House Finance Committee meeting                                                                      
to order at 8:51 a.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                                                                                                                
ALSO PRESENT                                                                                                                  
Representative Lance Pruitt, Sponsor; Dirk Craft, Staff,                                                                        
Representative Lance Pruitt.                                                                                                    
HB 250    EXTEND RENEWABLE ENERGY GRANT FUND                                                                                    
          HB 250 was SCHEDULED but not HEARD.                                                                                   
HB 284    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          CSHB 284(FIN) was REPORTED out of committee with                                                                      
          a "do pass" recommendation.                                                                                           
HB 285    APPROP: MENTAL HEALTH BUDGET                                                                                          
          CSHB 285(FIN) was REPORTED out of committee with                                                                      
          a "do pass" recommendation.                                                                                           
HB 358    ANWR ADVERTISING CONTRACT                                                                                             
          HB 358 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HOUSE BILL NO. 284                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain   programs,    capitalizing   funds,   amending                                                                    
     appropriations,   and   making  reappropriations;   and                                                                    
     providing for an effective date."                                                                                          
HOUSE BILL NO. 285                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
8:51:51 AM                                                                                                                    
Co-Chair Thomas  reported that the amended  operating budget                                                                    
was  $31,044,700  in  general  funds  below  the  governor's                                                                    
amended  request; in  all funds,  $77,683,700 was  below the                                                                    
governor's  amended request.  He thanked  the committee  for                                                                    
helping  to slow  the growth  of  government. The  agencies'                                                                    
general fund  portion of the  budget was 3.4  percent larger                                                                    
than  the   current  year.  In  total   the  government  was                                                                    
investing $6.272 billion in general  funds and $9.49 billion                                                                    
in all funds.                                                                                                                   
Co-Chair   Stoltze  MOVED   to   ADOPT  proposed   committee                                                                    
substitute HB  284 (FIN), Work Draft  CS 27-GH2599\T (Bailey                                                                    
3/13/12) as a working document.  There being NO OBJECTION is                                                                    
so ordered.                                                                                                                     
Co-Chair  Stoltze  MOVED  to report  CSHB  284(FIN)  out  of                                                                    
committee with individual recommendations.                                                                                      
Representative   Gara   OBJECTED.  He   thanked   Vice-chair                                                                    
Fairclough and  the Governor  for discovering  federal money                                                                    
to help  fund much  needed housing  for victims  of domestic                                                                    
violence. He felt it to be a very positive move.                                                                                
Representative Gara  WITHDREW his objection. There  being NO                                                                    
further  OBJECTION,  CSHB  284  (FIN) was  REPORTED  out  of                                                                    
committee with a "do pass" recommendation.                                                                                      
Co-Chair   Stoltze  MOVED   to   ADOPT  proposed   committee                                                                    
substitute HB 285 (FIN) CS27-GH2593\I  (Bailey 3/13/12) as a                                                                    
working  document.  There  being  NO  OBJECTION  it  was  so                                                                    
Co-Chair  Stoltze  MOVED  to report  CSHB  285(FIN)  out  of                                                                    
committee with individual recommendations.                                                                                      
Representative  Gara  OBJECTED.  He  noted a  change  to  be                                                                    
looked at before the bill hits the floor.                                                                                       
Representative Gara  WITHDREW his objection. There  being NO                                                                    
further  OBJECTION,  CSHB  285  (FIN) was  REPORTED  out  of                                                                    
committee with a "do pass" recommendation.                                                                                      
Representative Doogan expressed  his thoughts concerning the                                                                    
budget. He  signified that  he would  be voting  against the                                                                    
budget on the floor as he  thought it was too much money. He                                                                    
stressed that  it was not  a criticism of anyone  who worked                                                                    
on  the   budget,  but  believed   the  legislators   had  a                                                                    
responsibility  to  not do  what  has  always done  whenever                                                                    
money was available. He cautioned  that the present level of                                                                    
spending  was not  sustainable. He  admitted voting  for the                                                                    
budget the  last two  years for  political reasons,  but now                                                                    
regrets his action, and, if he  had it to do over, would not                                                                    
vote for the  budget. He remarked that he did  not know what                                                                    
to do about the high  costs and acknowledged that inflation,                                                                    
salary increases,  and higher  costs all  contribute inflate                                                                    
the  budget. The  budget passes  with good  explanations and                                                                    
reasons, but the result is  the budget has risen 7.8 percent                                                                    
per year and the operating  budget has nearly doubled in the                                                                    
last  ten years.  He admitted  being unable  to see  how the                                                                    
high increases can  be resolved. Along with  the increase in                                                                    
the  budget,  he  pointed  out  that there  needs  to  be  a                                                                    
corresponding level of oil money  to meet the growing needs.                                                                    
He was  concerned about the  time when more money  was being                                                                    
spent  than was  being  generated. He  applauded the  people                                                                    
working  on the  problem, especially  Vice-chair Fairclough.                                                                    
He  regretted  leaving the  legislature  with  the work  not                                                                    
complete. He  predicted that the spending  was unsustainable                                                                    
and  hard times  were  in  the future  if  spending was  not                                                                    
reigned  in. He  thanked the  committee for  giving him  the                                                                    
opportunity to explain why he was voting against the bill.                                                                      
9:02:34 AM                                                                                                                    
Representative Joule  agreed with many issues  brought up by                                                                    
Representative Doogan,  but indicated he would  vote for the                                                                    
budget.  He   found  it  amazing   that  due  to   the  time                                                                    
constraints of  the session, the legislature  must deal with                                                                    
the  operating budget  by the  increments  requested by  the                                                                    
governor. He  did not feel the  best was being done  for the                                                                    
people in the  state in a limited 90 day  session. He stated                                                                    
that more  time was needed and  cited the need to  return to                                                                    
the 120 day session. He pointed  out it was possible to deal                                                                    
with the budget in 90 days  if more work was involved during                                                                    
the interim. The Missions and  Measures process was in place                                                                    
to help  review how well  the agencies were using  the money                                                                    
being  spent. Policy  and  funding of  how  the process  was                                                                    
conducted  will benefit  the budget  process. He  reiterated                                                                    
the need to work harder  during the interim on budget items.                                                                    
He thanked  the budget subcommittees  and his staff  for all                                                                    
their work and assistance.                                                                                                      
9:07:29 AM                                                                                                                    
Representative Neuman  indicated he  had been  more involved                                                                    
in  the  budget  process  over recent  years  and  commended                                                                    
Missions and Measures program. He  believed the budget money                                                                    
would help  Alaska become more  efficient in the  future. He                                                                    
pointed out that  the cost of government  continued to climb                                                                    
while the pipeline  was delivering less and  less. There are                                                                    
things to  like and  dislike in the  budget, but  the budget                                                                    
process was a public process.  He stressed the importance of                                                                    
spending money  efficiently now to  try and help  the future                                                                    
when money may not be  as readily available. He declared his                                                                    
support for the bill.                                                                                                           
9:10:19 AM                                                                                                                    
Co-Chair  Stoltze  acknowledged  the individuals  who  dealt                                                                    
with the hard parts of  the budget: the Department of Health                                                                    
and  Social  Services,  the university,  and  education.  He                                                                    
pointed out  that the  amount of spending  was going  up and                                                                    
items   were   more   expensive.    He   remarked   on   the                                                                    
responsibility  and  difficulty  in making  tough  unpopular                                                                    
decisions  and acknowledged  the internal  pressures in  the                                                                    
capitol  from   the  public.  New  bills   were  also  being                                                                    
presented that  would increase formula growth.  He furthered                                                                    
that  the  price  of  oil   will  not  always  be  high  and                                                                    
production  was slowing  down. He  impressed that  decisions                                                                    
are daunting especially with large  departments, such as the                                                                    
ones Vice-chair  Fairclough and Representative Joule  had to                                                                    
deal with. Spending will continue to add up.                                                                                    
9:14:50 AM                                                                                                                    
Representative Gara acknowledged  that Representative Doogan                                                                    
had been consistent on his  views concerning the budget. The                                                                    
political idea in Washington D.C.  has been for one party to                                                                    
tear apart  anything that  another party  presents. Although                                                                    
the impasse is  seen all the time in  politics, he indicated                                                                    
his plan to vote for the  budget as he believed it moved the                                                                    
state  forward. He  remarked that  there were  parts of  the                                                                    
budget he  liked and some parts  he did not like.  He told a                                                                    
story of funding for a  health care issue and expressed that                                                                    
there were items in the budget  that paid for things that no                                                                    
one with  a conscience would take  out. It was hard  to find                                                                    
major changes without  a slash and burn  approach. One thing                                                                    
the  legislature is  unable to  do is  ask agencies  if they                                                                    
were  operating  efficiently.  Only  the  governor  has  the                                                                    
ability to  perform that task,  but efficiency could  be one                                                                    
way to get control of the  budget. He pointed out that there                                                                    
were some  items in  the budget  that would  make situations                                                                    
better  and save  the  state  money in  the  future such  as                                                                    
education. He added that an  unpopular stand might be to ask                                                                    
wealthy  cities to  pay for  more of  their municipal  needs                                                                    
instead of asking for state  funding. He believed the budget                                                                    
to  be  a  status  quo  budget.  He  recognized  the  future                                                                    
struggle to find exactly where and when to cut the budget.                                                                      
9:20:58 AM                                                                                                                    
Vice-chair  Fairclough gave  credit  to  the Alaska  Housing                                                                    
Finance Corporation  for discovering  a way,  in cooperation                                                                    
with  the  governor's  office,  to  help  with  housing  for                                                                    
individuals affected by domestic violence.                                                                                      
Representative  Guttenberg  mentioned  that  being  involved                                                                    
with  the budget  process was  like wrestling  with a  giant                                                                    
beast.  He  signified  that  each  member  has  a  role  and                                                                    
responsibility  with external  and  internal pressures,  but                                                                    
Alaska  was a  young  state where  funding  basic needs  was                                                                    
still part  of the  growth process.  He likened  the growing                                                                    
health  care to  a giant  beast; at  some point  health care                                                                    
will need  to be  addressed and dealt  with. He  thanked the                                                                    
co-chairs and subcommittee chairs for their work.                                                                               
9:25:38 AM                                                                                                                    
Co-Chair Thomas thanked the committee  and the chairs of the                                                                    
subcommittees for  their hard work.  He asserted  that there                                                                    
are many decisions to make,  but cuts were needed to prepare                                                                    
for the future  shortfall. He thanked David  Teal and Amanda                                                                    
Wright and their staff. He  also thanked his staff for their                                                                    
assistance. He  announced that the operating  budget in 1966                                                                    
was  $100,000,000 and  stressed the  inflation level  of the                                                                    
budget which  is now at  $9.6 billion. He thanked  again the                                                                    
administration and all who worked on the budget.                                                                                
HOUSE BILL NO. 250                                                                                                            
     "An Act relating to the renewable energy grant fund                                                                        
     and recommendation program; and providing for an                                                                           
     effective date."                                                                                                           
     HB 250 was SCHEDULED but not HEARD.                                                                                        
9:29:40 AM                                                                                                                    
AT EASE                                                                                                                         
9:40:30 AM                                                                                                                    
HOUSE BILL NO. 358                                                                                                            
     "An Act relating to an advertising campaign in support                                                                     
     of opening the Arctic National Wildlife Refuge for                                                                         
Co-Chair  Stoltze opened  the meeting  and reported  that HB                                                                    
358 was unchanged.                                                                                                              
Vice-chair Fairclough MOVED to  ADOPT HB 358, 27-LS1406\M as                                                                    
a working document. There being NO OBJECTION is so ordered.                                                                     
9:41:36 AM                                                                                                                    
REPRESENTATIVE LANCE PRUITT, SPONSOR  presented HB 358 as an                                                                    
advertising campaign  to open  the Arctic  National Wildlife                                                                    
Refuge  (ANWR) for  development. The  bill would  direct the                                                                    
state  to contract  with a  qualified trade  organization to                                                                    
advertise opening the coastal plain  of ANWR for oil and gas                                                                    
exploration  and development.  The Alaska  National Interest                                                                    
Land  Conservation Act  of 1980  prohibited  the leasing  or                                                                    
other development leading  to the production of  oil and gas                                                                    
from the  Arctic National Wildlife Refuge.  He stressed that                                                                    
domestic  demand for  oil continues  to  rise. The  proposed                                                                    
trade  organization could  communicate  that new  technology                                                                    
had greatly  improved the  environmental impact  on drilling                                                                    
and that  oil and  gas development  can coexist  in Alaska's                                                                    
arctic. He concluded that state  revenue depends on resource                                                                    
development;   therefore   it   makes   sense   to   promote                                                                    
responsible development to benefit Alaskans.                                                                                    
DIRK  CRAFT, STAFF,  REPRESENTATIVE  LANCE PRUITT,  informed                                                                    
the  committee   that  the  legislation  has   been  modeled                                                                    
directly  after  the   state's  tourism  marketing  contract                                                                    
9:44:21 AM                                                                                                                    
Representative Wilson asked if there  was a needed amount to                                                                    
make the program  effective. Representative Pruitt responded                                                                    
that  a qualified  trade  organization  would determine  the                                                                    
amount. The amount would be  whatever the organization would                                                                    
be willing to  bring to the table, and then  the state would                                                                    
match  that  amount.  He  expected it  would  be  less  than                                                                    
$500,000   from   a   small  organization.   If   a   larger                                                                    
organization  was  interested  then   the  amount  would  be                                                                    
larger, but the expected amount  would probably be under one                                                                    
million for the first year.                                                                                                     
Representative Gara  agreed it seemed reasonable  to set the                                                                    
record straight on ANWR. He  expressed his concern that some                                                                    
individuals  may  reap  a short  term  advantage,  but  give                                                                    
Alaska  a  long term  disadvantage.  He  suggested that  ads                                                                    
taken  out may  target certain  political candidates  in the                                                                    
lower 48. The short term  benefit could be for candidates to                                                                    
use the  cause for personal  gain to obtain more  votes, but                                                                    
the  long  term damage  would  be  other individuals  hating                                                                    
Alaska  for  interfering  in another  state's  politics.  He                                                                    
believed some politicians, who were  for opening ANRW, would                                                                    
support  it, but,  once  elected, makes  sure  it was  never                                                                    
opened.  He would  like accurate  information about  ANWR to                                                                    
set  the record  straight  in the  lower  48, but  cautioned                                                                    
against targeting candidates.                                                                                                   
Representative Pruitt indicated he  would be willing to talk                                                                    
with Representative Gara. He avowed  that the intent was not                                                                    
to  influence  political  candidates,   but  to  provide  an                                                                    
opportunity  to address  constituents in  the United  States                                                                    
about the  information. He  wanted to  make sure  people had                                                                    
accurate information on ANWR.                                                                                                   
9:48:38 AM                                                                                                                    
Co-Chair  Stoltze appreciated  Representative Gara's  point.                                                                    
He  wondered  if  the  state should  be  spending  money  on                                                                    
initiatives and  referendums and  stressed that it  could be                                                                    
counterproductive  to use  state  money in  that manner.  He                                                                    
indicated the desire to move  the bill out of committee, but                                                                    
a   few  policy   questions  needed   to   be  cleared   up.                                                                    
Representative Pruitt agreed.                                                                                                   
Representative   Costello  indicated   she  was   trying  to                                                                    
understand  the logistics  of the  bill.  She questioned  if                                                                    
there  would  be  proposals from  organizations,  the  state                                                                    
would  identify the  winning proposal,  and  then match  the                                                                    
proposal's amount.  She asked  how that  would work  and how                                                                    
the money  would be  raised. Representative  Pruitt answered                                                                    
that the trade association,  determined by the Department of                                                                    
Commerce, would provide the proposed  money amount that they                                                                    
received  from many  different sources.  The money  would be                                                                    
from  the  private  sector and  the  organization  would  be                                                                    
responsible for acquiring the money;  it would not be on the                                                                    
state. The  legislature then would appropriate  the money to                                                                    
match the  amount. The ownership  of the  marketing campaign                                                                    
would be  shared jointly  by the  trade association  and the                                                                    
state. Representative  Costello asked if an  amount had been                                                                    
determined   for   the   campaign.   Representative   Pruitt                                                                    
specified that  that he did not  want to put a  limit on the                                                                    
marketing group.  The plan was to  market Alaska's resources                                                                    
and  bring more  money into  the state.  He believed  Alaska                                                                    
should celebrate if a group wanted  to put a large amount of                                                                    
money into the  campaign. He did not want to  limit what the                                                                    
private sector could  bring in. He emphasized that  it was a                                                                    
50/50 program.  He reiterated  that to  date the  number was                                                                    
closer  to  $500,000.  Representative Costello  pointed  out                                                                    
that there are organizations  presently working on the issue                                                                    
and wondered  if the bill  included coordination  to prevent                                                                    
duplication  of efforts.  Representative Pruitt  stated that                                                                    
there  was  nothing in  the  bill  that specifically  states                                                                    
there must be coordination to  avoid duplication. He was not                                                                    
aware of  any other campaign  on a national  scale regarding                                                                    
the issue.                                                                                                                      
9:54:18 AM                                                                                                                    
Co-Chair  Stoltze appreciated  that  on page  1, line  13-14                                                                    
where it states a direct ownership of the campaign.                                                                             
Representative  Neuman indicated  his confusion  on how  the                                                                    
funding  mechanism  worked. Representative  Pruitt  revealed                                                                    
that the  bill was modeled  after the tourism  campaign. The                                                                    
Department of  Commerce does not  have a monetary  fund, but                                                                    
the trade  association would approach the  department with a                                                                    
monetary amount and then money  would be appropriated by the                                                                    
legislature   up  to   50  percent.   Representative  Neuman                                                                    
summarized that the state would  enter into a contact with a                                                                    
qualified  trade  association,  the  association  would  get                                                                    
funding for lobbying for ANWR,  and then ask the legislature                                                                    
for  matching funds.  Representative Pruitt  emphasized that                                                                    
the  plan was  for  a marketing  campaign  not lobbying.  He                                                                    
continued  that the  association  would find  the money;  it                                                                    
would not be on the state.                                                                                                      
Representative Neuman  voiced his  concern over  the state's                                                                    
monetary obligation  and would  like to see  a limit  put on                                                                    
for budgetary reasons. He would  like further information on                                                                    
the state's obligation.                                                                                                         
Co-Chair Stoltze  reiterated that the monetary  number would                                                                    
be   subject   to   appropriation.   Representative   Neuman                                                                    
questioned  if the  state does  not match  the amount  by 50                                                                    
percent, what then would happen.                                                                                                
9:59:46 AM                                                                                                                    
Representative Pruitt responded that  choices would be made.                                                                    
The campaign  could still  go forth even  if the  state does                                                                    
not match the 50 percent.                                                                                                       
Representative Doogan wanted  an idea of how  much money has                                                                    
been put into the ANWR  Arctic Power.  Representative Pruitt                                                                    
did not  know the exact  amount. Arctic Power money  is used                                                                    
for individuals to talk directly  to people on Capitol Hill.                                                                    
The  purpose of  the campaign  was  not to  reach people  in                                                                    
Washington,  but to  communicate information  to the  people                                                                    
who elect the representatives to Washington.                                                                                    
Representative Doogan  wanted the Arctic  Power information.                                                                    
He  expressed his  frustration  with  all the  indeterminate                                                                    
fiscal notes.  He asked for  a projection, not just  a blank                                                                    
check.  He did  not believe  it responsible  to keep  rubber                                                                    
stamping indeterminate fiscal notes.                                                                                            
Co-Chair   Stoltze  interjected   his  concerns   about  the                                                                    
political perimeters  and the monetary  limits of  the bill.                                                                    
He  indicated  that  he  would   like  to  see  a  committee                                                                    
substitute  to answer  the questions  rather than  deal with                                                                    
the questions on the floor.                                                                                                     
Representative Doogan  revealed he  was not trying  to block                                                                    
the  bill,  but would  prefer  more  parameters. The  fiscal                                                                    
notes are not telling the committee anything.                                                                                   
10:06:27 AM                                                                                                                   
Vice-chair Fairclough revealed a  letter of support from the                                                                    
local Teamsters  959 indicating that there  could many trade                                                                    
organizations that  might want  to move the  message forward                                                                    
concerning ANWR.  A limit or  an amount was needed  so there                                                                    
would  be a  real number  to evaluate.  She wondered  if the                                                                    
campaign would  qualify for  a film  tax credit.  She voiced                                                                    
her  concern of  an outside  organization crafting  the ANWR                                                                    
message. She  again mentioned the Arctic  Power organization                                                                    
was a very  small office, but the state was  receiving a lot                                                                    
for the money  invested. She stated though that  it was hard                                                                    
for one  person to reach  all the powers in  Washington with                                                                    
the message.  Arctic Power  has been  trying to  get factual                                                                    
information out to the public,  but some in the organization                                                                    
may not know enough. There needs  to be a consistency in the                                                                    
message.  She   suggested  that   maybe  Arctic   Power  was                                                                    
targeting  those  who   already  support  ANWR  development,                                                                    
instead of  targeting those who  are opposed.  She indicated                                                                    
her support  for an advertising  campaign, but  suggested it                                                                    
be a  consolidated effort with  the Arctic Power  board. She                                                                    
reported  that 41  U.S. senators  voted  for development  of                                                                    
ANWR  and  it was  a  prime  time  to advertise  for  arctic                                                                    
10:13:09 AM                                                                                                                   
Representative Edgmon  indicated he would be  supporting the                                                                    
bill,  but  was  skeptical  on  what  it  will  produce.  He                                                                    
believed  it would  take a  broad scale  message. Alaska  is                                                                    
viewed nationally as  the last frontier so he  is dubious on                                                                    
what  will be  achieved.  He also  indicated some  technical                                                                    
Co-Chair  Stoltze asserted  that  Alaska is  not  in a  good                                                                    
position just having the oil  industry is the spokesmen. The                                                                    
state  needs to  speak as  a  state policy  issue. HE  would                                                                    
prefer Alaskans to speak with their own voice.                                                                                  
HB  358  was  HEARD  and   HELD  in  committee  for  further                                                                    
The meeting was adjourned at 10:16 AM.                                                                                          

Document Name Date/Time Subjects
HB250 Don Eller Letters.pdf HFIN 3/14/2012 8:30:00 AM
HB 250
HB 358 Supporting Documents - Support Letter Alliance 3-2-12.pdf HFIN 3/14/2012 8:30:00 AM
HB 358
HB 358 Supporting Documents - Arctic Power 49 ANWR bullet points.pdf HFIN 3/14/2012 8:30:00 AM
HB 358
HB 358 Supporting Documents - AK Chamber Letter of Support.pdf HFIN 3/14/2012 8:30:00 AM
HB 358
HB 358 Sponsor Statement.pdf HFIN 3/14/2012 8:30:00 AM
HB 358
HB 358 Sectional Analysis.pdf HFIN 3/14/2012 8:30:00 AM
HB 358
HB250-DCCED-AEA-03-09-12-Recent-Updated.pdf HFIN 3/14/2012 8:30:00 AM
HB 250
HB 250 Letters.PDF HFIN 3/14/2012 8:30:00 AM
HB 250
HB358 Teamsters Letter.pdf HFIN 3/14/2012 8:30:00 AM
HB 358