Legislature(2013 - 2014)HOUSE FINANCE 519

01/21/2013 01:30 PM FINANCE


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01:31:24 PM Start
01:33:22 PM Fy14 Governor's Budget Overview: Department of Revenue
02:47:30 PM Fy14 Governor's Budget Overview: Alaska Court System
03:32:32 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Governor's FY14 Budget Overview: TELECONFERENCED
- Dept. of Revenue
- Alaska Court System
                  HOUSE FINANCE COMMITTEE                                                                                       
                     January 21, 2013                                                                                           
                         1:31 p.m.                                                                                              
                                                                                                                                
1:31:24 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Austerman  called   the  House  Finance  Committee                                                                    
meeting to order at 1:31 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Bryan Butcher,  Commissioner, Department Of  Revenue; Daniel                                                                    
R. Fauske,  Chief Executive Officer and  Executive Director,                                                                    
Alaska  Housing Finance  Corporation  (AHFC), Department  of                                                                    
Revenue;  Doug  Wooliver,  Deputy  Administrative  Director,                                                                    
Alaska   Court  System;   Rhonda  McLeod,   Chief  Financial                                                                    
Officer,  Alaska Court  System;  Jerry Burnett,  Legislative                                                                    
Liaison and  Director, Division of  Administrative Services,                                                                    
Department of Revenue                                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
FY14  GOVERNOR'S  BUDGET  OVERVIEW: DEPARTMENT  OF  REVENUE,                                                                    
ALASKA COURT SYSTEM                                                                                                             
                                                                                                                                
^FY14 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF REVENUE                                                                       
                                                                                                                                
1:33:22 PM                                                                                                                    
                                                                                                                                
BRYAN  BUTCHER, COMMISSIONER,  DEPARTMENT OF  REVENUE, (DOR)                                                                    
introduced    himself.   He    discussed   the    PowerPoint                                                                    
Presentation,   "Alaska   Department  of   Revenue,   Budget                                                                    
Overview,  House  Finance  Committee:  Monday,  January  21,                                                                    
2013" (copy on file).                                                                                                           
                                                                                                                                
Commissioner Butcher  shared slide 2, "Alaska  Department of                                                                    
Revenue.  The mission  of the  Department of  Revenue is  to                                                                    
collect, distribute  and invest funds for  public purposes."                                                                    
He stressed that there had  been recent discussions with the                                                                    
governor  regarding  greater  fiscal restraint.  He  relayed                                                                    
that there were  discussions about the price of  oil and how                                                                    
it  affects  the State's  revenue.  He  stressed that  there                                                                    
would be a  more constrained budget than  in previous years.                                                                    
He pointed out  that because of the  progressivity aspect of                                                                    
the  tax  structure,  the  amount  of  revenue  drops  at  a                                                                    
disproportionately   large   percentage  compared   to   the                                                                    
percentage decrease of oil price  or production. A drop down                                                                    
to $90 a  barrel of oil would have an  impact of billions of                                                                    
dollars in  State revenue. He  shared the major  programs of                                                                    
DOR:                                                                                                                            
                                                                                                                                
     Tax  Division:  Enforces the  tax  laws  of the  state;                                                                    
     collects and accounts for tax revenues                                                                                     
                                                                                                                                
    Treasury Division: Manages and invests state funds                                                                          
                                                                                                                                
     Permanent Fund  Dividend Division: Administers  the PFD                                                                    
     program and distributes the  annual dividend payment to                                                                    
     eligible Alaskans                                                                                                          
                                                                                                                                
     Child   Support   Services   Division:   Collects   and                                                                    
     distributes child support to custodial parents                                                                             
                                                                                                                                
Commissioner Butcher shared slide 3, "Results in FY 2012."                                                                      
                                                                                                                                
     Permanent  Fund  Dividend   Division:  Of  the  144,056                                                                    
     eligibility  cases  opened  in 2011,  88  percent  were                                                                    
     reviewed by  September 15 and either  closed, resolved,                                                                    
     or awaiting information from the applicant.                                                                                
                                                                                                                                
Representative Gara  wondered if  there was  criminal action                                                                    
that  would  take place  related  to  unpaid child  support.                                                                    
Commissioner  Butcher replied  that it  would be  a criminal                                                                    
offence if  child support  was not  paid. He  furthered that                                                                    
there  was currently  an examination  of a  possible "better                                                                    
way" to collect child support.                                                                                                  
                                                                                                                                
Representative Gara  recommended "deferred  prosecution" for                                                                    
individuals who  were calcified  child support  offenders. A                                                                    
deferred   prosecution  would   not  always   result  in   a                                                                    
prosecution, but merely prompt the  back child support to be                                                                    
paid.   Commissioner   Butcher   agreed  to   examine   that                                                                    
proposition,  and  agreed   to  participate  in  discussions                                                                    
regarding deferred prosecution.                                                                                                 
                                                                                                                                
Commissioner  Butcher  shared  that Child  Support  Services                                                                    
collected  $118.6 million,  a 4  percent increase  over last                                                                    
year.   Of this, $105.8  million was disbursed  to custodial                                                                    
parents and children.                                                                                                           
                                                                                                                                
1:39:57 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  wondered what happened to  the other $12.8                                                                    
million.                                                                                                                        
                                                                                                                                
JERRY   BURNETT,   DIRECTOR,  DIVISION   OF   ADMINISTRATIVE                                                                    
SERVICES, DEPARTMENT  OF REVENUE,  replied that  the "other"                                                                    
money  went  to the  federal  government  and the  State  of                                                                    
Alaska  to  repay  welfare  cases.   That  other  money  was                                                                    
formerly referred  to as Child  Support Receipts,  which was                                                                    
used for the  State match. Currently, it  was not separately                                                                    
identified in the budget.                                                                                                       
                                                                                                                                
Commissioner Butcher continued with slide 3:                                                                                    
                                                                                                                                
     The federally required self-assessment review showed                                                                       
     that CSSD exceeded all federal requirements for the                                                                        
     child support program.                                                                                                     
                                                                                                                                
     CSSD increased its teenage outreach program by                                                                             
     visiting 44 schools throughout the state.                                                                                  
                                                                                                                                
Co-Chair Stoltze made a joke  by asking if DOR was attending                                                                    
Personal  Accountability  classes  or  Health  classes.  Mr.                                                                    
Burnett replied that he was  not sure, but agreed to provide                                                                    
further information.                                                                                                            
                                                                                                                                
Co-Chair  Stoltze  expressed  concern  regarding  government                                                                    
programs    and    the   ramifications    for    individuals                                                                    
participating in those programs.                                                                                                
                                                                                                                                
Commissioner Butcher completed discussing slide 3:                                                                              
                                                                                                                                
     Tax Division:  96 percent of known  taxpayers filed tax                                                                    
     returns and made their payments timely.                                                                                    
                                                                                                                                
Representative Gara wondered how  many "C corporations" paid                                                                    
taxes in  the state. Commissioner Butcher  agreed to provide                                                                    
that information.                                                                                                               
                                                                                                                                
1:43:02 PM                                                                                                                    
                                                                                                                                
Commissioner Butcher looked at slide 4, "Results."                                                                              
                                                                                                                                
     On  January  15th,  the  State  sold  $162  million  of                                                                    
     General Obligation bonds.                                                                                                  
                                                                                                                                
     The  State received  more than  $600 million  in orders                                                                    
    and achieved a true interest cost of 1.42 percent.                                                                          
                                                                                                                                
     The  bonds were  the first  to be  issued by  the State                                                                    
     under its new AAA/Aaa/AAA rating.                                                                                          
                                                                                                                                
Co-Chair Austerman  wondered if the General  Obligation (GO)                                                                    
bonds  were from  FY 10.  Commissioner Butcher  replied that                                                                    
the GO bonds were the  last half of the voter-approved bonds                                                                    
in the 2010 general election.  He stated that bonds would be                                                                    
sold at the  beginning of March 2013, for the  first half of                                                                    
the transportation  projects that were approved  in the 2012                                                                    
election.                                                                                                                       
                                                                                                                                
Co-Chair Austerman  wondered if there were  other bonds from                                                                    
2010,  2011,  or  2012  that  were  not  yet  available  for                                                                    
transportation  projects. Mr.  Burnett replied  that the  GO                                                                    
bonds that were outstanding were from 2012.                                                                                     
                                                                                                                                
Commissioner Butcher continued to discuss slide 4.                                                                              
                                                                                                                                
     Fitch -                                                                                                                    
          The state has used recent windfalls from high oil                                                                     
     prices to repay past  (CBR) draws and remains committed                                                                    
     to maintaining  sizable reserves,  a key  rating factor                                                                    
     given forecasted declines in oil production over time.                                                                     
                                                                                                                                
     Moody's -                                                                                                                  
          A conservative approach to forecasting oil                                                                            
     revenues  with respect  to assumptions  for both  price                                                                    
     and production has long been  a key element of Alaska's                                                                    
     credit profile.                                                                                                            
                                                                                                                                
     Expectations that  the state  will continue  to provide                                                                    
     conservative forecasts support the Aaa rating.                                                                             
                                                                                                                                
     The   outlook   for   Alaska  is   stable,   based   on                                                                    
     expectations   the   state   will  continue   to   make                                                                    
     conservative  oil revenue  forecasts and  plan for  the                                                                    
     eventual depletion  of its oil resources,  and that its                                                                    
     large  budgetary reserves  will allow  it to  withstand                                                                    
     short-term production disruptions.                                                                                         
                                                                                                                                
     Standard and Poors (S&P) -                                                                                                 
          Considering   the    importance   of   oil-related                                                                    
     revenues to  the state's budget, its  forecasts of both                                                                    
     oil  prices and  production are  crucial to  its fiscal                                                                    
     condition.                                                                                                                 
                                                                                                                                
     The  state's Department  of Revenue  (DOR)  has a  good                                                                    
     track   record   forecasting  year-ahead   prices   and                                                                    
     production levels.                                                                                                         
                                                                                                                                
     A  bigger issue  for the  state is  measuring the  long                                                                    
     term rate of oil production decline.                                                                                       
                                                                                                                                
     The state has built  up substantial reserves to provide                                                                    
     essential  services in  the event  of a  future revenue                                                                    
     downturn,  while  hedging  against  declines  in  North                                                                    
     Slope oil production and fluctuations in oil prices.                                                                       
                                                                                                                                
Vice-Chair Neuman shared that  he had a discussion regarding                                                                    
bond ratings  with the director  of the  Legislative Finance                                                                    
Division (LFD) about the capacity of  the State if it was in                                                                    
a  deficit. He  observed  that the  State  was currently  in                                                                    
deficit spending  in the operating  budget. He  wondered how                                                                    
the  lending  agencies  would   evaluate  the  State's  bond                                                                    
ratings.   Commissioner Butcher replied that  the evaluation                                                                    
was based on  many pieces of a complex  puzzle. He commented                                                                    
that  the   State's  recent  history  of   surplus  spending                                                                    
reflected  positively in  its  evaluation. Deficit  spending                                                                    
would be negative, but he did  not feel that it would result                                                                    
in  a direct  downgrade.  The lending  agencies examine  the                                                                    
activity  with  the  economy  of the  state  and  its  ample                                                                    
reserves.                                                                                                                       
                                                                                                                                
Vice-Chair Neuman recommended  further information regarding                                                                    
deficit spending.  He remarked that Alaska  needed to remain                                                                    
competitive in the  oil market. He felt that  there would be                                                                    
more oil  available in the  United States. Alaska  needed to                                                                    
maintain or drop  the price of crude oil,  because of supply                                                                    
and demand in the market.                                                                                                       
                                                                                                                                
1:49:48 PM                                                                                                                    
                                                                                                                                
Commissioner   Butcher   discussed  slide   5,"Tax   Revenue                                                                    
Management System (TRMS)."                                                                                                      
                                                                                                                                
     $34.7 million was appropriated in 2011.                                                                                    
                                                                                                                                
     A 3rd  party project  manager was  brought on  board in                                                                    
     the  summer  of  2011  to   assist  with  the  RFP  and                                                                    
     contractor selection.                                                                                                      
                                                                                                                                
     An RFP was issued in the fall of 2012.                                                                                     
                                                                                                                                
     Fast  Enterprises'  GenTax   product  was  selected  in                                                                    
     December of 2012.                                                                                                          
                                                                                                                                
     DOR  will  be implementing  a  Commercial  OfftheShelf                                                                     
     (COTS) system.                                                                                                             
                                                                                                                                
     The phased implementation of the  DOR Tax Division's 22                                                                    
     tax systems will begin in March of 2013.                                                                                   
                                                                                                                                
    There is a 3 year timeline for full implementation.                                                                         
                                                                                                                                
Co-Chair  Austerman wondered  if the  tax filers  would file                                                                    
electronically.   Commissioner   Butcher  replied   in   the                                                                    
affirmative.   He  furthered   that  there   would  be   the                                                                    
opportunity  for  detailed   information  on  the  taxpayer,                                                                    
accessible by DOR.                                                                                                              
                                                                                                                                
Commissioner  Butcher looked  at slide  6, "Authorities  and                                                                    
Corporations."                                                                                                                  
                                                                                                                                
     Alaska   Housing   Finance  Corporation:   To   provide                                                                    
     Alaskans  access   to  safe,  quality   and  affordable                                                                    
     housing.                                                                                                                   
                                                                                                                                
     Alaska  Permanent  Fund  Corporation: To  maximize  the                                                                    
     value of the Permanent Fund within return objectives.                                                                      
                                                                                                                                
     Alaska  Mental Health  Trust  Authority: To  administer                                                                    
     the  Alaska Mental  Health Trust  as a  perpetual trust                                                                    
     and  to ensure  a comprehensive  and integrated  mental                                                                    
     health program to improve the lives of beneficiaries.                                                                      
                                                                                                                                
     Alaska  Municipal  Bond   Bank  Authority:  To  provide                                                                    
     municipalities  with  financing   options  for  capital                                                                    
     projects.                                                                                                                  
                                                                                                                                
Commissioner Butcher  shared slide  7, "7-Year Look  Back at                                                                    
Department Activities."                                                                                                         
                                                                                                                                
     Revenues collected  by the  Tax Division  increased 268                                                                    
     percent:                                                                                                                   
     FY05      $1,951,247,500                                                                                                   
     FY12      $7,173,800,000                                                                                                   
                                                                                                                                
     Funds  under   management  by  the   Treasury  Division                                                                    
     increased 128 percent:                                                                                                     
     12/31/2004     $20,448,418,000                                                                                             
     12/31/2012     $46,598,422,000                                                                                             
                                                                                                                                
     Number  of Permanent  Fund Dividends  paid to  Alaskans                                                                    
     increased 7 percent:                                                                                                       
     FY05      599,243                                                                                                          
     FY13      641,697 (total estimated for 2012 dividend)                                                                      
                                                                                                                                
     Number  of  child  support cases  increased  4  percent                                                                    
     while  the  amount  of  child  support  distributed  to                                                                    
     custodial parents increased 21 percent:                                                                                    
     FFY05     45,259 cases   $98.6 million disbursed                                                                           
     FFY12     47,044 cases   $118.6 million disbursed                                                                          
                                                                                                                                
Commissioner  Butcher looked  at slide  8, "Growth  in State                                                                    
Funds  2005-2012 CBRF  and GeFonsi."  He explained  that the                                                                    
red line  displayed the totals in  the Constitutional Budget                                                                    
Reserves (CBR) from 2004 to 2011.  He noted that the CBR had                                                                    
grown  considerably over  the three  years  prior. The  blue                                                                    
line represented  the General Fund and  other non-segregated                                                                    
investments (GeFonsi),  which was  at nearly the  same level                                                                    
as   the  CBR.   The  shaded   blue  area   represented  the                                                                    
combination of  the two funds, which  was currently slightly                                                                    
above $20 billion.                                                                                                              
                                                                                                                                
1:54:53 PM                                                                                                                    
                                                                                                                                
Representative  Gara  observed  that   the  graph  showed  a                                                                    
current  savings of  under $20  billion, but  the graph  was                                                                    
outdated. There was actually slightly  more than $20 billion                                                                    
in   savings.   Commissioner   Butcher  responded   in   the                                                                    
affirmative.  He shared  that  there  was approximately  $25                                                                    
billion currently in the savings accounts.                                                                                      
                                                                                                                                
Representative Gara  shared that  he had assumed  that there                                                                    
was  currently  $17 billion  in  the  savings accounts.  Mr.                                                                    
Burnett  clarified   that  the   graph  also   included  the                                                                    
investments.                                                                                                                    
                                                                                                                                
Co-Chair  Austerman  requested  a   list  of  the  different                                                                    
investments.  Mr. Burnett  stated that  there were  over 100                                                                    
funds in GeFonsi that were invested.                                                                                            
                                                                                                                                
Commissioner Butcher  shared that there would  be a separate                                                                    
presentation about the different investments.                                                                                   
                                                                                                                                
Representative  Gara surmised  that there  was approximately                                                                    
$17  billion  as  actual   savings  in  different  accounts.                                                                    
Commissioner Butcher responded in the affirmative.                                                                              
                                                                                                                                
Commissioner  Butcher  discussed  slide  9,  "Department  of                                                                    
Revenue Share  Total Agency Operations."  He noted  that the                                                                    
share was currently less than  1 percent, with the exception                                                                    
of  FY  11,  because   of  the  Alaska  Gasline  Development                                                                    
Corporation (AGDC) startup put into the operating budget.                                                                       
                                                                                                                                
Commissioner  Butcher   shared  slide  10,   "Department  of                                                                    
Revenue, Percent  of the Total  Department's Budget  by Fund                                                                    
Group." He  explained that the  graph displayed  a breakdown                                                                    
and a  bar chart  of the percent  of the  total department's                                                                    
budget by fund group. He  looked at the magenta-colored area                                                                    
of  the  graph, which  represented  other  state funds  from                                                                    
independent agencies  within DOR. He pointed  out the purple                                                                    
area, which  displayed the federal receipts.  The yellow and                                                                    
light blue areas represented the general funds.                                                                                 
                                                                                                                                
Co-Chair Austerman requested a  more detailed outline of the                                                                    
individual fund  sources in the magenta-colored  zone of the                                                                    
chart.   Commissioner  Butcher   agreed   to  provide   that                                                                    
information.                                                                                                                    
                                                                                                                                
Commissioner  Butcher looked  at  slide  11, "Department  of                                                                    
Revenue  FY  2014  Governor's Budget  by  Fund  Source."  He                                                                    
explained  that the  Permanent Fund  and corporate  receipts                                                                    
occupied  36 percent;  federal  funds  occupied 23  percent;                                                                    
ARMB  pension  funds  occupied 13  percent;  AHFC  corporate                                                                    
receipts occupied  11 percent; general funds  (UGF) occupied                                                                    
9  percent;  designated  general   funds  (DGF)  occupied  3                                                                    
percent; and other funds were 5 percent.                                                                                        
                                                                                                                                
1:59:20 PM                                                                                                                    
                                                                                                                                
Co-Chair Austerman wondered if the  red bar on page 10 could                                                                    
related to the pie chart on  page 11. Mr. Burnett replied in                                                                    
the affirmative, and  furthered that the red bar  on page 10                                                                    
included  everything displayed  on page  11, except  for the                                                                    
general and federal funds.                                                                                                      
                                                                                                                                
In  a  response  to  a  question  from  Co-Chair  Austerman,                                                                    
Commissioner Butcher  stated that the  red bar, on  page 10,                                                                    
was  meant   to  represent  a   big  picture   scenario.  He                                                                    
acknowledged that perhaps that was a mistake.                                                                                   
                                                                                                                                
Commissioner  Butcher  discussed  slide 12,  "Department  of                                                                    
Revenue FY 2014 Governor's  Budget by Program." He explained                                                                    
that the graph displayed  a breakdown of different divisions                                                                    
and  agencies:   The  Alaska  Permanent   Fund  Corporation,                                                                    
$126.312  million;   Alaska  Housing   Finance  Corporation,                                                                    
$97.037  million;  Alaska   Retirement  Management,  $52.136                                                                    
million; Child  Support Services Division,  $28.363 million;                                                                    
Tax  Division, $16.768  million; Treasury  Division, $10.323                                                                    
million; Permanent  Fund Dividend Division,  $8.378 million;                                                                    
Administration  and Support,  $5.298 million;  Alaska Mental                                                                    
Health   Trust  Authority,   $4.203   million;  and   Alaska                                                                    
Municipal Bond Bank Authority, $838.8 thousand.                                                                                 
                                                                                                                                
Representative  Gara  wondered  if   the  requests  for  the                                                                    
Permanent  Fund and  the Arm  Board  were for  the costs  of                                                                    
staffing to  run the contracts.  Mr. Burnett  responded that                                                                    
approximately  $114  million  of  the $126  million  in  the                                                                    
Permanent  Fund appropriation  was  for external  management                                                                    
fees.  The  Arm Board  had  over  $40 million  for  external                                                                    
management  fees. He  declared that  the largest  portion of                                                                    
the DOR budget was external management fees.                                                                                    
                                                                                                                                
Representative  Gara  wondered  if  DOR  had  ever  examined                                                                    
possible  savings   in  managing  the   funds.  Commissioner                                                                    
Butcher   replied   that   DOR  continually   examined   the                                                                    
possibility  of savings.  He  furthered  that the  Permanent                                                                    
Fund   Corporation  could   more  information   about  their                                                                    
internal  savings.  The  Arm   Board's  passive  and  active                                                                    
management would be addressed at a meeting at a later date.                                                                     
                                                                                                                                
2:05:15 PM                                                                                                                    
                                                                                                                                
Commissioner  Butcher shared  slide  13, "Key  FY 14  Budget                                                                    
Changes."                                                                                                                       
                                                                                                                                
     Film Office Executive Director: $148,000 GF, New                                                                           
     responsibility in Department of Revenue                                                                                    
     Oil and Gas Audit: $372,000 GF, Two new positions                                                                          
     Long Term Care Ombudsman: $107,000 GF/MH, New                                                                              
     assistant ombudsman for increasing case load                                                                               
     AHFC New Mortgage Marketing Plan: $680,000 AHFC                                                                            
     Receipts, New Marketing effort to increase AHFC market                                                                     
     share                                                                                                                      
                                                                                                                                
Representative  Thompson surmised  that three  positions had                                                                    
been  added to  the  Department of  Commerce, Community  and                                                                    
Economic  Development  DCCED,   including  the  Film  Office                                                                    
Executive Director. Mr. Burnett  replied in the affirmative.                                                                    
He stated that  because of the structure of  the bill, there                                                                    
would  be a  commission  established to  determine the  film                                                                    
credit distribution.                                                                                                            
                                                                                                                                
Representative  Thompson wondered  if  DOR  had not  tracked                                                                    
past film  taxes. Mr. Burnett  replied that DOR  had audited                                                                    
the  tax credit  after DCCED  had completed  the preliminary                                                                    
work. The additional work would be the marketing work.                                                                          
                                                                                                                                
2:11:00 PM                                                                                                                    
                                                                                                                                
Representative  Munoz   remarked  that  the   Department  of                                                                    
Administration had  added a retiree  advocate for  long term                                                                    
care issues,  so she wondered  what the  Long-term Ombudsman                                                                    
position would  be concerning. Mr. Burnett  replied that the                                                                    
position  was required  under federal  statute to  reside in                                                                    
the senior assisted living centers.                                                                                             
                                                                                                                                
Vice-Chair Neuman noted  that there would be  an increase of                                                                    
over $1  million by  adding the  new positions  displayed in                                                                    
slide  13. He  wondered  if  there was  a  way to  determine                                                                    
efficiencies  in dollar  form. Commissioner  Butcher replied                                                                    
that he did  not know the exact figure related  to the value                                                                    
of additional  auditors, but that  he could  provide further                                                                    
information.                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  stressed that the state  employment would                                                                    
be  subject  to  step  increases  and  retirement  benefits.                                                                    
Although there  were front-end costs, long-term  costs would                                                                    
be  considerably  higher.  Commissioner  Butcher  understood                                                                    
Vice-Chair Neuman's  concerns. He  furthered that  in recent                                                                    
years, there had been almost  no requests for new positions.                                                                    
He stressed  that the  Film Office  Director position  was a                                                                    
result of changing of department responsibilities.                                                                              
                                                                                                                                
Representative Gara  wondered why a position  was needed for                                                                    
someone  to just  read film  scripts. He  wondered why  that                                                                    
task could  not be  performed by someone  at a  lower level,                                                                    
like  an  intern.  Commissioner Butcher  replied  that  four                                                                    
commissioners had been tasked  to examine and make approvals                                                                    
on  appropriate project  to be  eligible for  state credits.                                                                    
The position of the Film  Office Executive Director would be                                                                    
to run that commission.                                                                                                         
                                                                                                                                
Representative Costello wondered  how AHFC coordinated their                                                                    
marketing efforts.                                                                                                              
                                                                                                                                
2:16:33 PM                                                                                                                    
                                                                                                                                
DANIEL  R. FAUSKE,  CHIEF  EXECUTIVE  OFFICER AND  EXECUTIVE                                                                    
DIRECTOR,   ALASKA  HOUSING   FINANCE  CORPORATION   (AHFC),                                                                    
DEPARTMENT OF  REVENUE, explained that  one of the  goals of                                                                    
AHFC  was to  focus on  a first-time  homeowner benefit.  He                                                                    
stated  that money  was needed  to market  the new  program,                                                                    
because there  was intense competition on  interest rates in                                                                    
the market.                                                                                                                     
                                                                                                                                
2:18:35 PM                                                                                                                    
                                                                                                                                
Representative  Thompson  wondered  if the  requested  money                                                                    
would  be in  competition with  private in-state  banks. Mr.                                                                    
Fauske  replied   in  the  negative.  He   stated  that  the                                                                    
mortgages would be sold, and managed by a private firm.                                                                         
                                                                                                                                
Mr.  Burnett  presented  slide  14,  "FY  14  Capital."  (in                                                                    
thousands)                                                                                                                      
                                                                                                                                
     PFD Division System Software Conversion: 1,500.0 PFD                                                                       
     Fund                                                                                                                       
                                                                                                                                
    PFD Division Computer Replacement:  $130.0 PFD Fund                                                                         
                                                                                                                                
     Child Support Computer Replacement: $143.9 Fed/74.1 GF                                                                     
                                                                                                                                
    Permanent Fund Corp NetApp Filer: $55.0 PF earnings                                                                         
                                                                                                                                
     Alaska Housing Finance Corp Multiple Projects:                                                                             
     $88,200.0 GF, $850.0 Other, $13,800.0 Fed                                                                                  
                                                                                                                                
          $31.5 million: Weatherization                                                                                         
          $20 million: Home Energy Rebate                                                                                       
          $8 million: Homeless Assistance Program                                                                               
          $7 million: Supplemental Housing Development                                                                          
          Program                                                                                                               
          $6 million: Teacher, Health, Public Safety and                                                                        
          VPSO Housing Loans                                                                                                    
          $4.5 million: Senior Citizen Housing Development                                                                      
                                                                                                                                
Representative Thompson  wondered if the backup  would be in                                                                    
millions of  dollars. Mr. Burnett  replied that it  would be                                                                    
in  thousand dollars.  He stressed  that most  child support                                                                    
programs were  federally matched 66 percent  federal, and 34                                                                    
percent state, whether capital or operating funds.                                                                              
                                                                                                                                
Representative  Thompson  surmised  that  the  PFD  computer                                                                    
replacements request was estimated  at $130,000. Mr. Burnett                                                                    
responded that there were 81  employees in the PFD Division,                                                                    
and 227 in the Child Support Division.                                                                                          
                                                                                                                                
2:24:49 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  queried some  commentary on  the AHFC                                                                    
rebate  programs, specifically  the Weatherization  program.                                                                    
He  stressed  that  the rebate  programs  saved  individuals                                                                    
great amounts  of money. He  specifically wondered  if money                                                                    
was  appropriated  to  the programs,  could  that  money  be                                                                    
utilized.  Mr.   Fauske  replied  that  there   would  be  a                                                                    
presentation on  the statistical data regarding  the savings                                                                    
that  have  resulted from  the  program.  He estimated  that                                                                    
approximately 4,000  jobs had  been created  as a  result of                                                                    
the rebate program, and that  the ideal situation for budget                                                                    
requests  would be  applied to  multiple years.  He stressed                                                                    
that marketing  would help the  program, because  people may                                                                    
not be  aware that  the programs  still exist.  He announced                                                                    
that the request was for one year of marketing.                                                                                 
                                                                                                                                
2:30:19 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  was grateful  for the  explanation of                                                                    
the rebate programs and their benefits.                                                                                         
                                                                                                                                
Representative  Gara  requested information  regarding  what                                                                    
programs were available for  individual communities. He felt                                                                    
that  legislators could  include that  information in  their                                                                    
newsletters to  supplement marketing.  Mr. Fauske  agreed to                                                                    
provide that information.                                                                                                       
                                                                                                                                
Mr. Burnett looked at slides 15 and 16, "Department of                                                                          
Revenue Ten Year Expenditure Projection."                                                                                       
                                                                                                                                
     The  mission  of  the  Department   of  Revenue  is  to                                                                    
     collect,  distribute   and  invest  funds   for  public                                                                    
     purposes.      The   department  achieves  its  mission                                                                    
     through  the   efforts  of  four  core   agencies,  two                                                                    
     corporate agencies, and four boards and authorities.                                                                       
                                                                                                                                
     The  following document  provides  an  estimate of  the                                                                    
     department's budget  changes over  the next  ten years.                                                                    
     Projecting budgets  ten years  into the future  for the                                                                    
     various programs and funding  sources of the Department                                                                    
     of Revenue is a  challenge. Changes to the department's                                                                    
     programs   are  not   anticipated  but   are  sometimes                                                                    
     affected  by  legislative action.    As  a result,  the                                                                    
     assumptions  and numbers  that  make up  the plan  will                                                                    
     continue   to  change   as   new  information   becomes                                                                    
     available.                                                                                                                 
                                                                                                                                
     Baseline Scenario Assumptions for DOR:                                                                                     
                                                                                                                                
     The  department's operations  costs  were increased  by                                                                    
     using  a  2.5  percent  annual  inflation  factor.  The                                                                    
     inflation   calculation  does   not  include   personal                                                                    
     services or investment management fees.                                                                                    
                                                                                                                                
     External  custody and  investment management  fees were                                                                    
     calculated   using   anticipated   rates   applied   to                                                                    
     estimated future market values.                                                                                            
                                                                                                                                
     Baseline Scenario Assumptions for AHFC:                                                                                    
                                                                                                                                
     Alaska Housing Finance  Corporation's (AHFC) operations                                                                    
     costs  were increased  by using  a  2.5 percent  annual                                                                    
     inflation  factor. The  inflation calculation  does not                                                                    
     include  personal  services  or  investment  management                                                                    
     fees.                                                                                                                      
                                                                                                                                
     The  Capital  budget  assumes  that  the  Corporation's                                                                    
     earnings will resume to pre-recession levels.                                                                              
                                                                                                                                
     The  Weatherization  program  assumes  the  State  will                                                                    
     contribute  $100  million   annually  to  maintain  the                                                                    
     current program.                                                                                                           
                                                                                                                                
     Baseline Scenario Assumptions for APFC:                                                                                    
                                                                                                                                
     The Alaska  Permanent Fund (APF) value  was grown using                                                                    
     median capital market expectations.                                                                                        
                                                                                                                                
     External investment manager  fees were calculated using                                                                    
     the  projected value  of  the  assets under  management                                                                    
     multiplied by the projected cost of 24 bps.                                                                                
                                                                                                                                
     Alaska Permanent  Fund Corporation's  (APFC) operations                                                                    
     costs  were  grown  by 2.5  percent  (inflation).  APFC                                                                    
     operations    costs    (personal   services,    travel,                                                                    
     contractual services,  commodities, and  equipment) are                                                                    
     correlated  to  the  growth of  the  Fund's  investment                                                                    
     holdings.                                                                                                                  
                                                                                                                                
2:33:59 PM                                                                                                                    
                                                                                                                                
Mr. Burnett  shared slide 17,  "10 Year  Projection Graphs."                                                                    
He explained that the capital  projection shows a spike, and                                                                    
that  is  because  Alaska  Gasline  Development  Corporation                                                                    
(AGDC)  received its  capitalization. The  department growth                                                                    
was fairly  low based on DOR's  projections and methodology.                                                                    
The  majority of  the department's  budget was  comprised of                                                                    
external investment management fees.                                                                                            
                                                                                                                                
Mr.  Burnett   discussed  slide  18,  "10   Year  Projection                                                                    
Graphs." He remarked that the  graph was drafted by LFD, and                                                                    
showed  a slightly  higher slope  than the  previous graphs.                                                                    
That  slope assumed  increases  based  on immediately  prior                                                                    
rates of growth, with a 6.1 percent annual growth.                                                                              
                                                                                                                                
Co-Chair Austerman wondered if DOR  was now anticipating a 1                                                                    
or  2  percent  growth  rate. Mr.  Burnett  replied  in  the                                                                    
affirmative,  and furthered  that  DOR did  not include  the                                                                    
personal services  costs. The  personal services  costs were                                                                    
included  in a  state-wide scenario,  so the  DOR projection                                                                    
graphs  would not  show future  contract costs  for personal                                                                    
services.                                                                                                                       
                                                                                                                                
Vice-Chair Neuman  wondered what divisions within  DOR would                                                                    
be most affected by the lower projections.                                                                                      
                                                                                                                                
2:38:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  Austerman  wondered  if   the  charts  would  look                                                                    
different  if   there  was  only   a  three  or   five  year                                                                    
projection. Mr.  Burnett replied  that the charts  would not                                                                    
look much  different than what was  displayed. He reiterated                                                                    
that the chart did  not include personal services increases,                                                                    
and stressed that personal services  fees were a significant                                                                    
cost to DOR.                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman wondered  if the  personal services  cost                                                                    
increase  would be  applied to  all divisions.  Commissioner                                                                    
Butcher replied  that the increase  would only  include one-                                                                    
third of the divisions,  and specifically mentioned that the                                                                    
Treasury and Tax Divisions were primarily General Funds.                                                                        
                                                                                                                                
Commissioner Butcher discussed slide 20, "Wrap-Up."                                                                             
                                                                                                                                
     The Tax  Division is actively engaged  in improving its                                                                    
     information    system   to    insure   efficient    tax                                                                    
     administration   and  timely   access  to   information                                                                    
     necessary  for  assisting  with  tax  policy  decisions                                                                    
     contemplated by the legislature.                                                                                           
                                                                                                                                
     The  Department  of  Revenue  is  the  state's  largest                                                                    
     investment  manager.  We  pride  ourselves  in  prudent                                                                    
     investment  practices for  a  variety  of programs  and                                                                    
     needs  while  achieving  and  maintaining  the  highest                                                                    
     credit rating  and thus the  lowest cost  of borrowing.                                                                    
                                                                                                                                
     Customer service sections in  the PFD and Child Support                                                                    
     Services  Divisions  have continuously  improved  their                                                                    
     business  practices  in   order  to  provide  increased                                                                    
     service levels without increasing staff.                                                                                   
                                                                                                                                
     Our  corporations  receive   national  recognition  for                                                                    
     their   exemplary   program   management   and   fiscal                                                                    
     solvency.                                                                                                                  
                                                                                                                                
Co-Chair  Austerman  handed  the   gavel  over  to  Co-Chair                                                                    
Stoltze.                                                                                                                        
                                                                                                                                
2:42:17 PM                                                                                                                    
                                                                                                                                
^FY14 GOVERNOR'S BUDGET OVERVIEW: ALASKA COURT SYSTEM                                                                         
                                                                                                                                
DOUG WOOLIVER, DEPUTY  ADMINISTRATIVE DIRECTOR, ALASKA COURT                                                                    
SYSTEM,  discussed  the   PowerPoint  Presentation,  "Alaska                                                                    
Court  System"  (copy  on  file).   He  shared  the  mission                                                                    
statement of the Alaska Court System:                                                                                           
                                                                                                                                
     The mission  of the Alaska  Court System is  to provide                                                                    
     an  accessible   and  impartial  forum  for   the  just                                                                    
     resolution of  all cases  that come  before it,  and to                                                                    
     decide  such   cases  in   accordance  with   the  law,                                                                    
     expeditiously and with integrity.                                                                                          
                                                                                                                                
Mr.   Wooliver   looked    at   slide   2,   "Distinguishing                                                                    
Characteristics of the Alaska Court System."                                                                                    
                                                                                                                                
     State Funded - No County or Municipal Courts                                                                               
                                                                                                                                
     Unified Judiciary                                                                                                          
                                                                                                                                
     Administrative Director Position Established in the                                                                        
     Constitution                                                                                                               
                                                                                                                                
Co-Chair Stoltze  asked why the Alaska  Court System (COURT)                                                                    
did not  frequently present to  the committee.  Mr. Wooliver                                                                    
responded that judges were hired  to resolve cases, and were                                                                    
not  hired in  administrative capacities.  The Court  System                                                                    
did not "weigh  in" on legislative issues,  because it would                                                                    
undermine the objectivity of the court.                                                                                         
                                                                                                                                
Co-Chair Stoltze  wondered why COURT did  not testify during                                                                    
budget  hearings.  Mr.  Wooliver replied  that  judges  were                                                                    
hired to resolve  cases, so the administrative  staff of the                                                                    
COURT drafts the budget for the Supreme Court's approval.                                                                       
                                                                                                                                
2:47:30 PM                                                                                                                    
                                                                                                                                
Representative   Thompson   wondered   what   the   required                                                                    
retirement age  for judges in  Alaska. Mr.  Wooliver replied                                                                    
that the  required retirement age  for judges in  Alaska was                                                                    
70-years-old.                                                                                                                   
                                                                                                                                
Representative Thompson  stated that  some states  had risen                                                                    
the retirement age to 75-years-old.  He wondered if changing                                                                    
the  retirement age  would  be an  advantage  to the  State,                                                                    
because  some retirement  judges were  returning to  work on                                                                    
contract.  Mr. Wooliver  did not  know the  COURT's view  on                                                                    
that issue. He stated that  some individual judges came back                                                                    
on contract  for assignments, but it  was on a case  by case                                                                    
basis, and was relatively inexpensive for the State.                                                                            
                                                                                                                                
Co-Chair Stoltze remarked that  the downside of not reaching                                                                    
70-years-old was "pretty harsh."                                                                                                
                                                                                                                                
Representative Gara shared  that he worked for  a judge that                                                                    
had  wondered  about  the constitutionality  of  a  required                                                                    
retirement age.                                                                                                                 
                                                                                                                                
Mr.    Wooliver   discussed    slide   3,    "Distinguishing                                                                    
Characteristics  of  Alaska  Court System  vs.  Other  State                                                                    
Entities."                                                                                                                      
                                                                                                                                
     No Discretionary Functions                                                                                                 
                                                                                                                                
     Reactive in Nature                                                                                                         
                                                                                                                                
     Must Accept Work Initiated by Others                                                                                       
                                                                                                                                
Mr. Wooliver shared slide 4, "Factors Impacting Workloads."                                                                     
                                                                                                                                
     Population                                                                                                                 
     Police                                                                                                                     
     Economy                                                                                                                    
     Statutory Changes                                                                                                          
     Other                                                                                                                      
                                                                                                                                
Co-Chair Stoltze  remarked that  the criminal  justice bills                                                                    
that  passed the  legislature had  very robust  COURT fiscal                                                                    
notes and were always fully funded. Mr. Wooliver agreed.                                                                        
                                                                                                                                
2:53:53 PM                                                                                                                    
                                                                                                                                
Mr.  Wooliver  discussed  slide 5,  "Caseloads  -  FY11  vs.                                                                    
FY12."                                                                                                                          
                                                                                                                                
     150,956 New Cases Filed in FY12                                                                                            
     Nearly Two-Thirds of All Cases Originated in the                                                                           
     Anchorage/Palmer/Kenai Courts                                                                                              
                                                                                                                                
     No significant change in Superior Court Caseload;                                                                          
     District Court Caseloads are down 9 percent                                                                                
                                                                                                                                
     Probate Cases up 4 percent                                                                                                 
                                                                                                                                
     Domestic Violence Cases up 10 percent                                                                                      
                                                                                                                                
Mr. Wooliver looked at slide 6, "Court System Employees."                                                                       
                                                                                                                                
     About 800 Permanent (GF-Funded)                                                                                            
     Primarily Clerical Employees                                                                                               
     Five Supreme Court Justices                                                                                                
     Three Court of Appeal Judges                                                                                               
     42 Superior Court Judges                                                                                                   
     23 District Court Judges                                                                                                   
     44 Magistrates                                                                                                             
                                                                                                                                
Mr. Wooliver discussed slide 7, "FY13 State of Alaska                                                                           
Funding - All Sources."                                                                                                         
                                                                                                                                
     Executive Branch (excludes debt service and special                                                                        
     appropriations) - 86.4 percent                                                                                             
                                                                                                                                
     University of Alaska - 11.3 percent                                                                                        
                                                                                                                                
     Alaska Court System - 1.4 percent                                                                                          
                                                                                                                                
     Legislature - .9 percent                                                                                                   
                                                                                                                                
Mr. Wooliver looked at slide 8, "Breakdown of FY13 Funding                                                                      
(GF)."                                                                                                                          
                                                                                                                                
     Personal Services Costs - 77.1 percent                                                                                     
                                                                                                                                
     Travel Costs - 1.3 percent                                                                                                 
                                                                                                                                
     Services - 18.4 percent                                                                                                    
                                                                                                                                
     Supplies/Commodities - 2.9 percent                                                                                         
                                                                                                                                
     Capital Outlay - .3 percent                                                                                                
                                                                                                                                
Mr. Wooliver looked at slide 9, "Increments Funded in                                                                           
FY13."                                                                                                                          
                                                                                                                                
     No Dark Courtrooms - Six Clerical Positions                                                                                
    Geographic Differential for Non-Judicial Employees                                                                          
     Maintenance Costs for Leases, Utilities, Security                                                                          
     Screening and Software                                                                                                     
                                                                                                                                
Co-Chair Stoltze handed the gavel to Co-Chair Austerman.                                                                        
                                                                                                                                
Representative  Costello wondered  if  the  wondered if  the                                                                    
geographic differential for  non-judicial employees referred                                                                    
to a  percentage of their salary,  or if it was  a lump sum.                                                                    
Mr. Wooliver replied that it  would be a percentage of their                                                                    
salary based on the established rate for the community.                                                                         
                                                                                                                                
Mr. Wooliver  discussed slides 10 through  12, "FY14 Funding                                                                    
Requested."                                                                                                                     
                                                                                                                                
     Bethel Americans with Disabilities Act Accommodation -                                                                     
     $456,800                                                                                                                   
                                                                                                                                
Representative Gara  wondered if  there was  a consideration                                                                    
to  disallow  the  cost-differential factoring  (high  three                                                                    
rule) into  the retirement  payments. Mr.  Wooliver deferred                                                                    
to Ms. McLeod.                                                                                                                  
                                                                                                                                
2:59:03 PM                                                                                                                    
                                                                                                                                
RHONDA  MCLEOD,   CHIEF  FINANCIAL  OFFICER,   ALASKA  COURT                                                                    
SYSTEM, replied  that the tier  1 employees in PERS  and TRS                                                                    
were  most impacted  by  the high  three  average rate.  She                                                                    
stressed that there were very few tier 1 employees.                                                                             
                                                                                                                                
Representative Gara wondered if tier  2 employees had a high                                                                    
3 rule.  Ms. McLeod understood  that tier 2 employees  had a                                                                    
high   5  rule.   Mr.  Wooliver   agreed  to   provide  more                                                                    
information.                                                                                                                    
                                                                                                                                
Representative Gara shared that  there was no ordinary small                                                                    
claims  court  in  Alaska.  He wondered  if  the  COURT  had                                                                    
considered establishing  a small claims court,  performed by                                                                    
lower cost magistrates  to avoid the high  costs in district                                                                    
courts. Mr.  Wooliver replied that  individuals had  a right                                                                    
to a  jury trial in district  court, but no right  to a jury                                                                    
trial in small claims court.                                                                                                    
                                                                                                                                
Mr.  Wooliver   continued  to   discuss  the   FY14  funding                                                                    
requests.                                                                                                                       
                                                                                                                                
     Bethel Americans with Disabilities Act Accommodation -                                                                     
     $456,800                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  wondered if prospective jurors  were asked                                                                    
about ocular  impairment.  Mr. Wooliver  under the Americans                                                                    
with  Disabilities Act  (ADA) and  COURT rules,  jurors were                                                                    
not required  to hear. So,  when that question is  asked, it                                                                    
is only in order to provide accommodation.                                                                                      
                                                                                                                                
3:04:26 PM                                                                                                                    
                                                                                                                                
Mr.  Wooliver   continued  to   discuss  the   FY14  funding                                                                    
requests.                                                                                                                       
                                                                                                                                
     Wide Area Network Bandwidth Expansion - $691,700                                                                           
                                                                                                                                
     GF/MH Mental Health Trust Authority Recommended                                                                            
     Projects - $1,165,000                                                                                                      
     Replace Federal Pass-Through Funding                                                                                       
                                                                                                                                
Representative Costello wondered if  there could be a budget                                                                    
tracking code. She specifically  wondered what requests were                                                                    
in place,  which were drafted as  a response to the  loss of                                                                    
federal funds. She  stressed that she would  like to examine                                                                    
this issue,  because she  wanted to  determine the  value of                                                                    
each program in the COURT system.                                                                                               
                                                                                                                                
                                                                                                                                
Co-Chair   Stoltze  felt   that  Representative   Costello's                                                                    
concerns were valid.                                                                                                            
                                                                                                                                
Mr.  Wooliver   continued  to   discuss  the   FY14  funding                                                                    
requests.                                                                                                                       
                                                                                                                                
     $691,300 is requested for:                                                                                                 
          Utilities and Operating Leases                                                                                        
          New Leases - Craig and Sand Point                                                                                     
          Contractual Services Increases                                                                                        
                                                                                                                                
     Six New Positions - $651,100                                                                                               
          Magistrate Performance Analyst                                                                                        
          Programmer/Analyst                                                                                                    
          Security Analyst                                                                                                      
          Contracts and Leasing Manager                                                                                         
          Senior Accounting Clerk                                                                                               
          Records Technician                                                                                                    
                                                                                                                                
3:09:27 PM                                                                                                                    
                                                                                                                                
Representative  Gara wondered  why a  magistrate performance                                                                    
analyst   was  needed   to   analyze   the  performance   of                                                                    
magistrates  that  were  analyzed by  judges.  Mr.  Wooliver                                                                    
replied that there was a  "training judge" that was assigned                                                                    
to each magistrate. The magistrate  hired positions on their                                                                    
own.                                                                                                                            
                                                                                                                                
Representative  Gara surmised  that  the magistrates  worked                                                                    
for the judge,  so the judges were able to  best analyze the                                                                    
magistrate's  work.  He wondered  why  the  judges were  not                                                                    
analyzing those magistrates. Mr.  Wooliver replied that some                                                                    
analysis  was  performed  in-house.  He  stressed  that  the                                                                    
magistrates could use more training  that what was currently                                                                    
offered.                                                                                                                        
                                                                                                                                
Mr.  Wooliver   continued  to   discuss  the   FY14  funding                                                                    
requests.                                                                                                                       
                                                                                                                                
     Projects Targeted at Alcohol Abuse - $90,000                                                                               
         Operators without Licenses (OWL) Program                                                                               
          Fairbanks 24/7 Sobriety Pilot Program                                                                                 
                                                                                                                                
Co-Chair  Stoltze shared  a  story about  a  person who  had                                                                    
their  license suspended  until 2095,  and wondered  if that                                                                    
was an atypical  case of a suspension.  Mr. Wooliver replied                                                                    
that there were many people  who had their license suspended                                                                    
such that they could never get their license returned.                                                                          
                                                                                                                                
Representative  Wilson  requested information  regarding  on                                                                    
the Operators  Without License program. Mr.  Wooliver agreed                                                                    
to provide that information.                                                                                                    
                                                                                                                                
3:14:25 PM                                                                                                                    
                                                                                                                                
Representative   Thompson  queried   the  results   of  24/7                                                                    
Sobriety  pilot  program.  Mr.  Wooliver  replied  that  the                                                                    
program did  not work well  in Anchorage. He  furthered that                                                                    
the program focused  on people who were most  likely to lose                                                                    
custody of their children, because  of their substance abuse                                                                    
problems. The  program did  not focus  on Driving  Under the                                                                    
Influence (DUI) offenders.                                                                                                      
                                                                                                                                
Mr.  Wooliver   continued  to   discuss  the   FY14  funding                                                                    
requests.                                                                                                                       
                                                                                                                                
     Computer Replacement Funding - $175,000                                                                                    
          Increase base funding to $600,000                                                                                     
                                                                                                                                
     Software Support - $114,900                                                                                                
                                                                                                                                
     Interpreter and Translation Services - $25,000                                                                             
                                                                                                                                
Mr. Wooliver  discussed slides 13  and 14,  "Funding Changes                                                                    
FY05 to FY14."                                                                                                                  
                                                                                                                                
     Personal Services:                                                                                                         
          Salary Adjustments                                                                                                    
                                                                                                                                
          New Judges - Eight Superior Court and Three                                                                           
          District Court                                                                                                        
                                                                                                                                
          No Dark Courtrooms Initiative                                                                                         
                                                                                                                                
     Services:                                                                                                                  
          Leased   Facility    Expenses   including   Public                                                                    
          Building Fund Participation                                                                                           
          Utility and Maintenance Costs                                                                                         
          Software Support Costs                                                                                                
          Therapeutic Courts                                                                                                    
                                                                                                                                
Mr.  Wooliver looked  at slide  15,  "Alaska Court  System's                                                                    
Share of Total Agency Operations."  He stated that the graph                                                                    
displayed the  percentage of the  cost of  State government,                                                                    
with the  COURT averaging  from 2 percent  to .2  percent of                                                                    
the total general fund spending.                                                                                                
                                                                                                                                
Mr.  Wooliver  discussed  slide 16,  "Alaska  Court  System,                                                                    
Percent  of the  Total Agency's  Budget by  Fund Group."  He                                                                    
explained  that COURT  was almost  completely funded  by the                                                                    
general fund.  He added that  there were some  Mental Health                                                                    
Trust Authority receipts and other State funds.                                                                                 
                                                                                                                                
Co-Chair  Stoltze  wondered  if  the  COURT  benefited  from                                                                    
forfeiture  and  seizures.  Mr. Wooliver  replied  that  the                                                                    
COURT did not benefit form forfeiture and seizures.                                                                             
                                                                                                                                
Mr. Wooliver  displayed slide 17,  "Funding Changes  FY05 to                                                                    
FY14."  The  allocation of  increased  general  fund was  44                                                                    
percent for  salary adjustments; 31 percent  for increments;                                                                    
10   percent  for   therapeutic  courts;   10  percent   for                                                                    
maintenance; and 5 percent for no dark courtrooms.                                                                              
                                                                                                                                
3:20:37 PM                                                                                                                    
                                                                                                                                
Mr.  Wooliver looked  at slides  18 through  21, "  FY15 and                                                                    
Beyond."                                                                                                                        
                                                                                                                                
     Respond to Work Initiated by Others                                                                                        
          Makes Planning for the Next Ten Years Very                                                                            
          Difficult                                                                                                             
                                                                                                                                
     Electronic Document Management (E-Filing) Project                                                                          
          Impact to All Justice Agencies                                                                                        
          Improve   Public   Access   to   Data   and   Case                                                                    
          Information  Facilitate   Data  Exchanges  Between                                                                    
          Justice    Agencies   Improve    Case   Processing                                                                    
          Efficiencies                                                                                                          
                                                                                                                                
Co-Chair Stoltze felt that the  statement on slide 18 was an                                                                    
inverse statement.                                                                                                              
                                                                                                                                
Mr. Wooliver continued to discuss "FY15 and Beyond."                                                                            
                                                                                                                                
     In the Near Term, New Superior Court Judges may be                                                                         
     Needed for Juneau, Bethel, and Palmer Courts                                                                               
                                                                                                                                
     In the Long Term, New Judges may be Needed Due to                                                                          
     Population Changes in Southcentral Alaska                                                                                  
                                                                                                                                
Vice-Chair   Neuman  wondered   if  electronic   filing  was                                                                    
available for paying a traffic  ticket on site. Mr. Wooliver                                                                    
replied  that the  electronic filing  for  paying a  traffic                                                                    
ticket was something that COURT  hoped would be available in                                                                    
the future.                                                                                                                     
                                                                                                                                
Mr. Wooliver continued to discuss "FY15 and Beyond."                                                                            
                                                                                                                                
     Improvement of Justice Facilities in Kotzebue, Bethel,                                                                     
     and Nome and Additional Space in Palmer                                                                                    
                                                                                                                                
     Videoconferencing and Bandwidth Expansion                                                                                  
          Reduce   costs    associated   with   transporting                                                                    
          defendants to court proceedings                                                                                       
                                                                                                                                
Mr.  Wooliver  discussed  slide 22,  "Alaska  Court  System,                                                                    
Continued  Budget Growth  Compare to  10-year Plan."  If the                                                                    
last several  years' growth was  applied to the  future, the                                                                    
green  line   hike  would  occur.  The   black  dotted  line                                                                    
represented the current plan.                                                                                                   
                                                                                                                                
3:27:52 PM                                                                                                                    
                                                                                                                                
Mr.  Wooliver  looked at  slide  23,  "Alaska Court  System,                                                                    
Continued  Budget Growth  Compared  to  10-Year Plan."  This                                                                    
slide was similar to slide  22, but with all funding sources                                                                    
considered.                                                                                                                     
                                                                                                                                
Co-Chair Austerman discussed housekeeping.                                                                                      
                                                                                                                                
Co-Chair Stoltze also discussed housekeeping.                                                                                   
                                                                                                                                
Representative Gara commented that  it was often cheaper for                                                                    
the State to utilize  in-house employees, rather than hiring                                                                    
outside managers.                                                                                                               
                                                                                                                                
Vice-Chair Neuman  pointed out  that DOR  had not  offered a                                                                    
plan   to  implement   spending  controls.   He  felt   that                                                                    
information was necessary from the departments.                                                                                 
                                                                                                                                
Representative Costello felt that  there were also some ways                                                                    
to  control   the  costs,  which  included   hiring  outside                                                                    
managers.   She  stressed   that   State  employees   versus                                                                    
contracted employees issues were based on circumstance.                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
3:32:32 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:32 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
Revenue HFIN Overview 1-21-13 final.pdf HFIN 1/21/2013 1:30:00 PM
Revenue Overview Final
Court System HFIN Overview 1 21 13 v 2.pdf HFIN 1/21/2013 1:30:00 PM
Court System Overview Final
Court System Overviw Response.pdf HFIN 1/21/2013 1:30:00 PM
Courts Overview Response
DOR AHFC HFC Overview Response1-21.pdf HFIN 1/21/2013 1:30:00 PM
AHFC/DOR Overview Response
Court System Overviw Response.pdf HFIN 1/21/2013 1:30:00 PM
Corts System Overview Response