Legislature(2013 - 2014)HOUSE FINANCE 519

03/03/2014 01:30 PM FINANCE

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01:33:41 PM Start
01:33:55 PM HB266 || HB267
03:29:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
- Introduction & Adoption of the Committee
Substitutes Incorporating the Subcommittees'
- Subcommittee Reports
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 3, 2014                                                                                            
                         1:33 p.m.                                                                                              
1:33:41 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Austerman called the House Finance Committee                                                                           
meeting to order at 1:33 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 David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Pete Ecklund, Staff, Representative Alan Austerman; Joan                                                                        
Brown, Staff, Representative Alan Austerman.                                                                                    
HB 266    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          HB 266 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 267    APPROP: MENTAL HEALTH BUDGET                                                                                          
          HB 267 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HOUSE BILL NO. 266                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain  programs,   capitalizing  funds,   and  making                                                                    
     reappropriations; making appropriations  under art. IX,                                                                    
     sec. 17(c),  Constitution of the State  of Alaska, from                                                                    
     the constitutional budget reserve fund."                                                                                   
HOUSE BILL NO. 267                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health program."                                                                                      
1:33:55 PM                                                                                                                    
Co-Chair Austerman discussed the agenda for the meeting.                                                                        
Vice-Chair Neuman MOVED to ADOPT the proposed committee                                                                         
substitute for HB 266, Work Draft 28-GH2671\P (Wallace,                                                                         
Vice-Chair Neuman MOVED to ADOPT the proposed committee                                                                         
substitute for HB 267, Work Draft 28-GH2673\C (Wallace,                                                                         
Co-Chair Austerman invited his staff to discuss the bills.                                                                      
1:35:26 PM                                                                                                                    
PETE   ECKLUND,   STAFF,   REPRESENTATIVE   ALAN   AUSTERMAN                                                                    
addressed the bills in a prepared statement:                                                                                    
     This  year the  Governor  submitted  an FY15  operating                                                                    
     budget below  the current FY14  budget.   Including the                                                                    
     amendments  submitted  in  February,  the  Unrestricted                                                                    
     General Fund  in Agency  Operations decreased  by 0.2%.                                                                    
     That is  a significant  change in course  when compared                                                                    
     to  the annual  7.2% growth  rate over  the last  eight                                                                    
     As  you've heard  during  various presentations  before                                                                    
     the   Committee,   the   state's  fiscal   outlook   is                                                                    
     worrisome.   When the  legislature left  at the  end of                                                                    
     last  session,  there  was an  expectation  that  there                                                                    
     would be  a deficit of approximately  1 Billion dollars                                                                    
     for FY14.                                                                                                                  
     When  the   legislature  convened  in   January,  those                                                                    
     projections had  changed.  Now  we anticipate  the FY14                                                                    
     deficit  to be  in the  2 Billion  dollar range.     To                                                                    
     compound the  situation, revenues  are not  forecast to                                                                    
     cover  our  expenditures  for several  years,  so  this                                                                    
     situation could be called our "new normal."                                                                                
     Mr.  Co-Chair,  with  our "new  normal"  in  mind,  you                                                                    
     directed Subcommittees  to look for  additional savings                                                                    
     with  the goal  of  reducing  the Unrestricted  General                                                                    
     Fund agency operations, non-formula  budget by at least                                                                    
     $50 Million from the current year.                                                                                         
     Why did  you pick such  a specific goal of  a reduction                                                                    
     in agency  operations, non-formula?    Simply put, when                                                                    
     the public thinks  about government, agency operations,                                                                    
     non-formula  is the  area of  government they  are most                                                                    
     likely thinking about.                                                                                                     
     But Mr.  Chair, agency operations, non-formula  is only                                                                    
     half of the story.   The total UGF in agency operations                                                                    
     is  nearly split  50/50  between  formula programs  and                                                                    
     non-formula funding.                                                                                                       
     And  as you  know Mr.  Chair, the  areas of  our budget                                                                    
     that  are  growing  the  fastest   are  the  3  'budget                                                                    
     drivers'. Which are the  formula programs (Medicaid and                                                                    
     education) and retirement funding.                                                                                         
     In addition,  if we don't get  prison system recidivism                                                                    
     under control, we may need  to build another new prison                                                                    
     in just a few short years.                                                                                                 
1:38:03 PM                                                                                                                    
Mr. Ecklund continued reading from a prepared statement:                                                                        
     So if  we are  really going  to get  a handle  on state                                                                    
     spending and  extend the life of  our savings accounts,                                                                    
     we've  got to  address more  than just  the dollars  we                                                                    
     invest in each department's programs.                                                                                      
     We  are going  to  have  to address  the  3 big  budget                                                                    
     drivers,  and  also  come  up   with  a  plan  to  slow                                                                    
     correctional system  recidivism, to  blunt the  need to                                                                    
     build a new prison in the near future.                                                                                     
     So Mr.  Chair, we have  4 budget drivers,  and actually                                                                    
     maybe really 5  budget drivers.  With  our 'new normal'                                                                    
     budget reality, we will also  have to pare down capital                                                                    
     budgets compared to the recent past.                                                                                       
     With all  of that  in mind,  your instructions  for the                                                                    
     operating  budget were  to reduce  Unrestricted General                                                                    
     Funds   in  particular   as   any   reduction  in   the                                                                    
     expenditure  of  UGF extends  the  length  of time  our                                                                    
     savings accounts will last.                                                                                                
     Mr. Co-Chair,  you also  directed the  Subcommittees to                                                                    
     continue to  review the agency budgets  via a five-step                                                                    
          1.   Review  the  agency Mission,  Core  Services,                                                                    
          and Performance Measures  so through results-based                                                                    
          budgeting, the public could  see how effective and                                                                    
          efficient agency  programs are and  agencies could                                                                    
          demonstrate the value the  public is receiving for                                                                    
          our investments in them.                                                                                              
          2.   Review  budget changes  since FY06,  enabling                                                                    
          us to track GF and Total Funds changes over time                                                                      
          3.   Review  agency  10-year  plans,  to  evaluate                                                                    
          future changes that department's see coming                                                                           
          4.   Review  audit findings  made by  the Division                                                                    
          of Legislative Audit  -providing an accountability                                                                    
          5.    And get  a status  update on  budget changes                                                                    
          approved for the current fiscal year, FY14.                                                                           
     Then,  after   looking  at  an  agency's   mission  and                                                                    
     results, looking back, looking  forward, and looking at                                                                    
     current year progress, each  Subcommittee had a context                                                                    
     in  which to  review  the budget  changes proposed  for                                                                    
     The subcommittees  had just 39  days to  review budgets                                                                    
     prior  to   the  February  28   Subcommittee  close-out                                                                    
     deadline.   Mr. Chairman,  I believe  that this  is the                                                                    
     quickest the  Finance Sub-Committees have  reviewed and                                                                    
     made their recommendations on the budget.                                                                                  
     I'd  like to  thank David  Teal  and the  staff at  the                                                                    
     Legislative Finance  Division as they were  integral in                                                                    
     preparing  the  2006  Look-back graphs  and  associated                                                                    
     data,   10-year   plan    graphs,   and   consolidating                                                                    
     information   on   current   year  progress   for   the                                                                    
     Subcommittees,  along   with  providing   their  normal                                                                    
     budget  support function  for the  Subcommittees.   The                                                                    
     Legislature is  fortunate to have  such a  talented and                                                                    
     patient  group of  people assisting  in development  of                                                                    
     the state's budget.                                                                                                        
     I'd also like  to thank Karen Rehfeld and  the staff of                                                                    
     the   Office  of   Management  and   Budget,  and   the                                                                    
     leadership teams  of the Executive Branch  agencies for                                                                    
     their help in the budget review process.                                                                                   
     Last but  certainly not least,  I'd also like  to thank                                                                    
     all of the subcommittee  staff, members, and chairs for                                                                    
     their  hard work  and diligence  in order  to put  this                                                                    
     budget together.                                                                                                           
1:41:17 PM                                                                                                                    
Mr. Ecklund continued to address the operating budget bills                                                                     
in a prepared statement:                                                                                                        
     Subcommittees  were  provided   with  the  supplemental                                                                    
     budget requests  submitted by the Governor  on February                                                                    
     4  and were  charged  with  reviewing their  respective                                                                    
     agencies' non-language  budget amendments  submitted by                                                                    
     the  Governor  on February  19.    As expected,  a  few                                                                    
     supplemental  requests were  precursors to  FY15 budget                                                                    
     amendments.    We  appreciate the  efforts  of  OMB  to                                                                    
     highlight  those  facts   in  both  their  supplemental                                                                    
     spreadsheet and their amendment spreadsheet.                                                                               
     Mr.  Co-Chair,  all  of the  Subcommittee  reports  are                                                                    
     found on  the Legislative Finance website.   Reports on                                                                    
     these  two  committee  substitute bills  will  also  be                                                                    
     posted on  the Legislative Finance  website immediately                                                                    
     after this hearing.                                                                                                        
     And now to the numbers:                                                                                                    
     The  operating   budget  Committee   Substitute  totals                                                                    
     $9.149 Billion  (all funds), a  reduction of  just over                                                                    
     $3 Billion from the Governor's Amended budget.                                                                             
     This  CS does  not include  the Governor's  requested 3                                                                    
     Billion  dollar appropriation  from the  Constitutional                                                                    
     Budget  Reserve for  the retirement  systems.   How  we                                                                    
     ultimately  fund our  retirement systems,  and at  what                                                                    
     level,  will   be  discussed   more  as   this  session                                                                    
     Mr. Chairman,  I am  happy to report  that we  have met                                                                    
     your goal of at least $50  M UGF below the current year                                                                    
     for  agency operations,  non-formula.   If you  exclude                                                                    
     formula programs,  this budget is 53  Million UGF below                                                                    
     FY14 in Agency Operations.  This is a 2.3% reduction.                                                                      
     The subcommittees  were able to identify  $27.9 Million                                                                    
     in additional  UGF savings from the  Governor's Amended                                                                    
     budget, when  you include formula  programs this  CS is                                                                    
     $40.4  Million  below  FY14 Management  Plan.  Combined                                                                    
     Agency  Operations and  the Statewide  items UGF  equal                                                                    
     $5.1 Billion, for a UGF  reduction of $1.3 Billion from                                                                    
     FY14, Other  Funds increased $6.7  Million for  a total                                                                    
     of  $1.3 Billion,  and  Federal  Receipts decreased  by                                                                    
     $23.6 million to $2.016 Billion.                                                                                           
     Well  Mr.  Chairman,  you might  ask,  'how  does  this                                                                    
     proposed  operating  budget  affect our  savings'?  The                                                                    
     combined balances of  the Constitutional Budget Reserve                                                                    
     Fund  and   the  Statutory  Budget  Reserve   Fund  are                                                                    
     estimated  to  be around  $15  Billion  dollars at  the                                                                    
     start of Fiscal Year 2015.                                                                                                 
          As the operating budget sits in front of you, and                                                                     
     IF  there were  no additional  capital budget  spending                                                                    
     above  the  Governor's  429  M UGF,  we  would  have  a                                                                    
     projected deficit  of just under a  billion dollars for                                                                    
     But we know that this budget  is a work in progress and                                                                    
     only one  piece of our  budget puzzle.   At the  end of                                                                    
     the  day,  if  we   take  the  Governor's  approach  to                                                                    
     retirement  funding and  transfer  3  billion from  the                                                                    
     CBR, and if we increase  education funding and increase                                                                    
     the capital  budget, we could end  up transferring well                                                                    
     over 4 Billion dollars from savings in FY15.                                                                               
     How much  of our savings we  can afford to use  in FY15                                                                    
     will be fleshed out as this session progresses.                                                                            
     Now, Ms.  Brown will  describe the  changes we  made to                                                                    
     the language sections of the bill.                                                                                         
1:44:30 PM                                                                                                                    
JOAN BROWN, STAFF, REPRESENTATIVE ALAN AUSTERMAN, addressed                                                                     
the language section of HB 266 in a prepared statement:                                                                         
     Mr.  Co-Chair,  I'll  identify  the  language  sections                                                                    
     where  changes were  made and  describe those  changes.                                                                    
     Starting on page 53 of the bill:                                                                                           
     Section 8, ALASKA HOUSING FINANCE CORPORATION                                                                              
     Mr. Co-Chair, in subsection (a)  we replaced the phrase                                                                    
     "adjusted net  income" with the  phrase "change  in net                                                                    
     assets" to conform to AHFC's statutes.                                                                                     
     In  subsection (b)  we changed  the lead-in  wording to                                                                    
     reflect  the  fact  that AHFC  will  be  retaining  the                                                                    
     entire  7.5 Million  dollar dividend  in  order to  pay                                                                    
     debt service;                                                                                                              
     In subsection (c) we changed  the location of where any                                                                    
     excess  Dividend  funds  would be  deposited  from  the                                                                    
     Governor-proposed  Budget Reserve  Fund  to the  Alaska                                                                    
     Capital   Income    Fund.      This    recognizes   the                                                                    
     legislature's  traditional use  of corporate  dividends                                                                    
     for capital  projects.   However, no  "excess" dividend                                                                    
     funds are anticipated.                                                                                                     
     Page 54, Section 9, ALASKA PERMANENT FUND CORPORATION                                                                      
     Mr.  Co-Chair,  in  subsection  (b),  we  accepted  the                                                                    
     Governor's amendment reducing  the amount for inflation                                                                    
     proofing  from  975  Million dollars  to  965  Million.                                                                    
     This  is   based  on  the  corporation's   most  recent                                                                    
     Page 55, Section 10,  ALASKA INDUSTRIAL DEVELOPMENT AND                                                                    
     EXPORT AUTHORITY                                                                                                           
     Mr.  Co-Chair, just  as we  did in  the Alaska  Housing                                                                    
     Finance Corporation section,  we revised subsection (b)                                                                    
     so if there should be  any excess AIDEA Dividend funds,                                                                    
     they will  be deposited into the  Alaska Capital Income                                                                    
     Fund, instead  of the budget  reserve fund.   Again, no                                                                    
     "excess" dividend funds are anticipated.                                                                                   
     Section 11, DEPARTMENT OF ADMINISTRATION                                                                                   
     The only change  we made is in subsection  (c) where we                                                                    
     replaced  the word  "agency" with  the "Alaska  Oil and                                                                    
     Gas Conservation Commission".                                                                                              
     Section  12,  DEPARTMENT  OF COMMERCE,  COMMUNITY,  AND                                                                    
     ECONOMIC DEVELOPMENT                                                                                                       
    We made no changes to subsections (a) through (e).                                                                          
     In   subsection   (f),   regarding   the   Power   Cost                                                                    
     Equalization program,  we replaced the phrase  "and not                                                                    
     to exceed  44 Million  248 Thousand 4  Hundred dollars"                                                                    
     with  the   phrase  "and  not  to   exceed  the  amount                                                                    
     determined under AS  42.45.085 subsection (a) paragraph                                                                    
     (1)."  This  just clarifies that the maximum  is the 7%                                                                    
     amount allowed per statute.                                                                                                
     We  made several  changes to  subsection (h)  regarding                                                                    
     the  Alaska Seafood  Marketing  Institute's budget.  At                                                                    
     the recommendation  of Legislative  Finance, throughout                                                                    
     the  subsection   we  changed  "program   receipts"  to                                                                    
     "statutory  designated  program   receipts"  to  better                                                                    
     reflect  that  ASMI's  receipts   are  generated  by  a                                                                    
     voluntary tax  to fund the  marketing program.  We also                                                                    
     reduced  the original  general  fund  amount listed  in                                                                    
     paragraph  (3)  for  two  reasons.   The  first  was  a                                                                    
     reduction  of   4.5  Million  dollars,  which   is  now                                                                    
     appropriated  as general  fund match  in new  paragraph                                                                    
     (4).   The revised amount  in paragraph (3)  reflects a                                                                    
     10% general  fund reduction of  777 Thousand  2 Hundred                                                                    
     dollars.  In  subsection  (i),  also  relating  to  the                                                                    
     Alaska  Seafood Marketing  Institute, we  again changed                                                                    
     "program  receipts"  to "statutory  designated  program                                                                    
     receipts".  In  paragraph  (2) we  clarified  that  the                                                                    
     general  fund appropriations  in  subsection (h)  match                                                                    
     federal  funds as  well as  industry contributions.  We                                                                    
     also  added  new  intent   language  as  paragraph  (4)                                                                    
     stating that  the appropriations for ASMI  are included                                                                    
     in the  base budget.  Previously, as  appropriations in                                                                    
     the  language  section,  the ASMI  appropriations  were                                                                    
     considered one-time items.                                                                                                 
1:48:29 PM                                                                                                                    
Ms. Brown continued to discuss changes in the HB 266                                                                            
language section:                                                                                                               
     Page 58, Section 13, DEPARTMENT OF CORRECTIONS                                                                             
     We  made  no change  to  this  section, other  than  to                                                                    
     accept the  Governor's amendment to delete  the earlier                                                                    
     estimate that  1.8 Million  General Fund  dollars would                                                                    
     be necessary.   The  department does expect  to collect                                                                    
     all of the budgeted Federal Funds.                                                                                         
     Section   14,  DEPARTMENT   OF   EDUCATION  AND   EARLY                                                                    
     We made a minor change  adding 1 dollar to the original                                                                    
     25 Million dollar appropriation,  in order to make this                                                                    
     item  subject  to  Conference Committee  as  there  are                                                                    
     still many education issues to  be resolved during this                                                                    
     Section 15, DEPARTMENT OF FISH AND GAME                                                                                    
     We made  no change  to what is  now subsection  (a). We                                                                    
     moved  an appropriation  of 500  Thousand dollars  from                                                                    
     Fish and Game's section 1,  the numbers section, as our                                                                    
     new subsection (b).  This  is part of an overall clean-                                                                    
     up   of   the    sport   fishing   enterprise   account                                                                    
     appropriations.    There   are  more  related  clean-up                                                                    
     changes in sections 23 and 25.                                                                                             
     Page 59, Section 16, DEPARTMENT  OF LABOR AND WORKFORCE                                                                    
     We   made  no   change  other   than  to   reorder  the                                                                    
     Section 18, DEPARTMENT OF NATURAL RESOURCES                                                                                
     In  subsection(c)   we  just  made   technical  wording                                                                    
     Pages 60 - 62  Section  20,  UNIVERSITY OF  ALASKA  and                                                                    
     Section 21, OFFICE OF THE GOVERNOR                                                                                         
     We made  no change  other than to  switch the  order of                                                                    
     the sections.                                                                                                              
     Pages 63 - 68 Section 23, DEBT AND OTHER OBLIGATIONS                                                                       
     We made  several formatting and slight  wording changes                                                                    
     in this  section. In subsection  (h), we  reordered the                                                                    
     appropriations  relating  to  general  obligation  bond                                                                    
     debt in  series date  order starting with  the earliest                                                                    
     series.  In  addition,  in  subsection  (h),  paragraph                                                                    
     (13),  we accepted  the  Governor's amendment  reducing                                                                    
     the  debt  payment  estimate   for  the  upcoming  bond                                                                    
     issuance  from   20  Million  dollars  to   10  Million                                                                    
     dollars. We reordered the  paragraphs in subsection (i)                                                                    
     relating  to debt  of  the  international airports  and                                                                    
     relocated what  had been  subsection (m)  to subsection                                                                    
     (i) as a  new paragraph (4). In subsection  (j), in the                                                                    
     lead-in language  total dollar amount and  in paragraph                                                                    
     (1), we included the  Governor's amendment that reduced                                                                    
     the amount for the Anchorage  Jail lease payment by 512                                                                    
     Thousand 276 dollars. We  also reworded subsection (el)                                                                    
     as part  of the clean-up of  the appropriations related                                                                    
     to the sport fish hatchery  revenue bonds and the sport                                                                    
     fishing enterprise account.                                                                                                
1:51:39 PM                                                                                                                    
Ms. Brown continued to read from a statement related to the                                                                     
HB 266 language section:                                                                                                        
     Pages 69 - 71 Section 25, FUND CAPITALIZATION                                                                              
     We reordered the subsections  and relocated a provision                                                                    
     from  the   Fund  Transfer  section.   The  substantive                                                                    
     changes are:                                                                                                               
     In subsection (b), we reduced  the appropriation to the                                                                    
     community revenue  sharing fund by 10  Million dollars,                                                                    
     down to  50 Million dollars.  We deleted what  had been                                                                    
     subsection (k)  appropriating an estimated  3.3 Million                                                                    
     dollars of  interest earnings  to the  in-state natural                                                                    
     gas pipeline fund.  We opted to keep  those earnings in                                                                    
     the General  Fund. We  deleted the  original subsection                                                                    
     (m)  related   to  the  fish  and   game  revenue  bond                                                                    
     redemption  fund  and   the  sport  fishing  enterprise                                                                    
     account  and replaced  it  with  three new  subsections                                                                    
     (j), (k), and (l)  that complete the necessary language                                                                    
     clean-up.   In  subsection   (o),  pertaining   to  the                                                                    
     election  fund, we  just added  the estimated  interest                                                                    
     earnings amount of 35 Thousand dollars.                                                                                    
     Pages 71 - 73 Section 26, FUND TRANSFERS                                                                                   
     In  addition to  reordering subsections  and relocating                                                                    
     one subsection, we made a few other changes:                                                                               
     We deleted what had been  subsection (h) as part of the                                                                    
     sport  fish   revenue  bonds  and  the   sport  fishing                                                                    
     enterprise account  clean-up.  The  cleaned-up language                                                                    
     is now in section 25  as subsection (k). In subsections                                                                    
     (h) and (i), the  statutory reference was corrected. In                                                                    
     subsections (j) and (k), formerly  (n) and (o), instead                                                                    
     of appropriating a specific  amount, we appropriate the                                                                    
     June 30,  2014, balances  of the  administrative income                                                                    
     accounts  to the  administrative operating  accounts in                                                                    
     both  the Alaska  clean water  administrative fund  and                                                                    
     the  Alaska drinking  water administrative  fund. These                                                                    
     transfers  simply  move  funds   from  one  account  to                                                                    
     another  within  each  fund and  do  not  increase  the                                                                    
     budget. We  also combined what had  been subsection (i)                                                                    
     with  the other  appropriations  to the  fish and  game                                                                    
     fund in what  is now subsection (l). We  also added the                                                                    
     total estimated  amount of 888 Thousand  dollars to the                                                                    
     lead-in language of the subsection.                                                                                        
1:54:13 PM                                                                                                                    
Ms. Brown continued reading from a prepared statement                                                                           
regarding changes to the HB 266 language section:                                                                               
     Pages 73 - 74, Section 27, RETIREMENT SYSTEM FUNDING                                                                       
     As Mr. Ecklund stated  earlier, we made several changes                                                                    
     to  this   section  as  we  are   investigating  other,                                                                    
     hopefully  more  affordable,  funding options  for  the                                                                    
     public employees' and  teachers' retirement systems. We                                                                    
     deleted  both  the  original  subsection  (a)  the  1.9                                                                    
     Billion dollar  appropriation to the  public employees'                                                                    
     retirement system  and the original subsection  (b) the                                                                    
     1.1  Billion  dollar  appropriation  to  the  teachers'                                                                    
     retirement  system. Both  appropriations were  from the                                                                    
     constitutional budget reserve fund,  so we also removed                                                                    
     the  words "constitutional  budget  reserve fund"  from                                                                    
     the  catch line  of  the section  and deleted  original                                                                    
     subsection  (d) which  was the  CBR three-quarter  vote                                                                    
     provision.   We  made   no  change   to  the   judicial                                                                    
     retirement system language. It  had been subsection (c)                                                                    
     and is now the only appropriation.                                                                                         
     Pages 74 - 75, Section    28,   SALARY    AND   BENEFIT                                                                    
     We  made some  minor wording  changes in  this section,                                                                    
     and in  subsection (b), we added  paragraph (3) because                                                                    
     we  accepted the  Governor's budget  amendment for  the                                                                    
     new  bargaining unit  agreement with  United Academics.                                                                    
     The cost  of this  agreement, $3.4 Million  dollars, is                                                                    
     included in the numbers section, section 1.                                                                                
     Page 75, Section 29, SHARED TAXES AND FEES                                                                                 
     We just  slightly reordered the language  in subsection                                                                    
     Page 76, Section 31, RATIFICATIONS  OF SMALL AMOUNTS IN                                                                    
     STATE ACCOUNTING SYSTEM                                                                                                    
     We just reordered the wording of this section.                                                                             
     Section 32, STATUTORY BUDGET RESERVE FUND                                                                                  
     The only change was to  add the word "Statutory" to the                                                                    
     catch line of the section.                                                                                                 
     Section 35                                                                                                                 
     We added this new  effective date section applicable to                                                                    
     Sections 30  and 34,  as both take  effect on  June 30,                                                                    
     Section 36                                                                                                                 
     We just  updated the section  number reference  for the                                                                    
     Public Education Fund deposit.                                                                                             
     Section 37                                                                                                                 
     We made no change other than to add the reference to                                                                       
     new section 35 and updated the other section number                                                                        
1:56:52 PM                                                                                                                    
Representative Gara asked if Mr.  Ecklund had testified that                                                                    
the governor's  year-over-year operating budget  reflected a                                                                    
22  percent  decrease. Mr.  Ecklund  replied  that for  non-                                                                    
formula  agency operations  the CS  was $53  million or  2.3                                                                    
percent below the current year budget.                                                                                          
Representative  Gara asked  for the  difference between  the                                                                    
governor's operating  budget and  the operating  budget from                                                                    
the  prior year.  Mr. Ecklund  answered that  the governor's                                                                    
amended operating budget for  formula and non-formula agency                                                                    
operations had decreased by 0.2 percent.                                                                                        
Representative Gara  remarked that  the proposed  budget was                                                                    
approximately $1  billion less  than the prior  year because                                                                    
the governor  had chosen to  spend the retirement  money out                                                                    
of the CBR instead of  the General Fund. Mr. Ecklund pointed                                                                    
to  handout "A"  titled  "UGF Budget  Comparisons" (copy  on                                                                    
file). He  directed attention to  the capital budget  in the                                                                    
FY  14  column totaling  $796  million  and noted  that  the                                                                    
proposed  capital   budget  was  $429  million.   The  other                                                                    
difference   was   related   to  retirement   funding;   the                                                                    
appropriation  had  been  $634  million in  FY  14  and  was                                                                    
$500,000  in  the FY  15  amended  budget for  the  Judicial                                                                    
Retirement  System. The  governor  had proposed  to take  $3                                                                    
billion from  the CBR for  PERS and TRS. He  elaborated that                                                                    
if  the funds  were not  taken from  the CBR  the governor's                                                                    
amended FY 15 column  for appropriations to retirement would                                                                    
read $708 million.                                                                                                              
2:00:01 PM                                                                                                                    
Representative Gara pointed  to page 58, line  17 related to                                                                    
education language. He asked if  the $25 million placeholder                                                                    
was  to   reflect  the  governor's  proposed   Base  Student                                                                    
Allocation (BSA)  increase of  approximately $85.  Ms. Brown                                                                    
replied  that the  $25 million  had been  in the  governor's                                                                    
proposed budget; it was not related to the BSA increase.                                                                        
Representative Gara  asked if the  $25 million was  the same                                                                    
as other  one-time increments the  governor had  included in                                                                    
the   past  several   years.  Ms.   Brown  replied   in  the                                                                    
Representative  Guttenberg directed  attention  to page  69,                                                                    
line 19 of  the CSHB 266(FIN) language  section. He wondered                                                                    
if the $50  million that had decreased from  $60 million was                                                                    
the total  amount available for  revenue sharing.  Ms. Brown                                                                    
answered  that the  figure  was not  the  total amount  that                                                                    
would be distributed; the amount  of the appropriation would                                                                    
be added  to the fund and  the amount distributed for  FY 15                                                                    
was based  on the amount  in the fund  as of June  30, 2014.                                                                    
Therefore, the $60 million would be distributed in FY 15.                                                                       
Representative Munoz  pointed to  page 18 of  CSHB 266(FIN).                                                                    
She asked  which services were  included in  the $33,397,000                                                                    
for public nursing.  Ms. Brown deferred the  question to the                                                                    
subcommittee chair.                                                                                                             
Representative Munoz  was specifically interested  in family                                                                    
planning  that  had  been discussed  in  a  recent  Medicaid                                                                    
amendment that  had been before the  committee. She wondered                                                                    
if  the  family planning  services  were  covered under  the                                                                    
Co-Chair Austerman would follow up on the question.                                                                             
Representative Wilson was also  interested to know if health                                                                    
planning,  systems development,  or community  health grants                                                                    
had  to  do  with  the family  planning  the  committee  had                                                                    
discussed recently.                                                                                                             
2:03:29 PM                                                                                                                    
Vice-Chair Neuman  noted the  items were  coming out  of the                                                                    
governor's  budget and  believed the  increments for  family                                                                    
planning  centers were  under  the  health clinics  portion.                                                                    
There were  also a  variety of  public health  funds through                                                                    
various programs.                                                                                                               
Co-Chair  Austerman communicated  that  the committee  would                                                                    
return  to the  questions in  more detail  at a  later time;                                                                    
possibly  during  subcommittee  reports. He  asked  for  the                                                                    
report on the CSHB 267(FIN).                                                                                                    
2:04:34 PM                                                                                                                    
Ms.  Brown  addressed  changes  to  HB  267  in  a  prepared                                                                    
     Page 11, in Section 4, CAPITAL PROJECTS                                                                                    
     We  deleted  one  of the  five  mental  health  capital                                                                    
     projects:  it  was the Department of  Health and Social                                                                    
     Services  project for  MH  Essential Program  Equipment                                                                    
     for 500  Thousand dollars. Each year  the House Finance                                                                    
     Committee removes  one capital project from  the Mental                                                                    
     Health budget.  The other body,  in its version  of the                                                                    
     Mental  Health bill,  will add  back  that project  and                                                                    
     delete the four capital  projects in the House's budget                                                                    
     bill,  thus making  all of  the mental  health projects                                                                    
     subject to Conference Committee.                                                                                           
     Mr. Co-Chair,  the language sections begin  on page 14,                                                                    
     Section   8,  SALARY   AND   BENEFIT  ADJUSTMENTS.   In                                                                    
     subsection (b),  we added paragraph  (3), as we  did in                                                                    
     House  Bill 266,  for the  University's new  bargaining                                                                    
     unit agreement. We also  made minor wording corrections                                                                    
     in subsections (c) and (d).                                                                                                
     Mr. Co-Chair, those are all  of the language changes in                                                                    
     House Bill 267.                                                                                                            
2:05:50 PM                                                                                                                    
Representative  Guttenberg wondered  if  amendments made  to                                                                    
collective bargaining  units in  CSHB 267(FIN)  would remove                                                                    
funds  from the  mental  health budget.  Ms.  Brown did  not                                                                    
believe   so.  She   elaborated   that  it   had  been   the                                                                    
legislature's practice  to list every bargaining  unit under                                                                    
both the operating and mental health budgets.                                                                                   
2:06:39 PM                                                                                                                    
Co-Chair Austerman asked committee  members to provide their                                                                    
subcommittee reports.                                                                                                           
Representative  Munoz began  with the  University of  Alaska                                                                    
budget subcommittee recommendations. Total  funds for the FY                                                                    
15  operating  budget  were  $915,161,800.  Of  that  amount                                                                    
approximately $362  million were Unrestricted  General Funds                                                                    
(UGF); the subcommittee budget  was approximately $9 million                                                                    
or 2.4  percent lower than  the FY 14 management  plan. When                                                                    
compared  to   the  FY  15   adjusted  base,  the   cut  was                                                                    
approximately  $12 million  or a  reduction of  3.2 percent.                                                                    
She  relayed  that  the  governor  proposed  a  system-wide,                                                                    
unallocated reduction  in FY  15 of  $14.9 million  UGF; the                                                                    
subcommittee increased  it by $1  million to  $15.9 million.                                                                    
She  communicated  that  the university  was  responding  to                                                                    
budget  changes by  reducing  off-campus lease  obligations,                                                                    
becoming  more  energy  efficient, delaying  the  hiring  of                                                                    
people to  fill vacancies, and by  reducing or consolidating                                                                    
programs and services.                                                                                                          
Representative Munoz  relayed that  the budget  included the                                                                    
approval   of   contractual    agreements   for   university                                                                    
employees, additional operating funds  for the Mat-Su Center                                                                    
for the Arts, and new  operating funds for the University of                                                                    
Alaska  Anchorage  (UAA)  sports  center.  The  subcommittee                                                                    
adopted three  pieces of intent  language. The first  was in                                                                    
support of the  UAA Office of Research  and Graduate Studies                                                                    
and  the  University of  Alaska  Fairbanks  (UAF) Office  of                                                                    
Intellectual  Property  and  Commercialization.  The  second                                                                    
directed the university  to collect data on  graduates for a                                                                    
performance matrix  on each degree  program offered  and how                                                                    
students did in the market  place after leaving college. The                                                                    
third directed  the university to  review programs  based on                                                                    
benchmarks with measurable  outcomes and to show  how it may                                                                    
achieve  savings and  efficiencies on  items such  as travel                                                                    
costs   and  energy   consumption.   She   noted  that   the                                                                    
subcommittee  had  also heard  about  the  pressing need  to                                                                    
upgrade  the   UAF  heat  and   power  plant.   She  thanked                                                                    
university  staff for  their  work  during the  subcommittee                                                                    
2:09:52 PM                                                                                                                    
Representative  Munoz reported  subcommittee recommendations                                                                    
for  the  Department  of  Environmental  Conservation  (DEC)                                                                    
budget. The  subcommittee recommended total FY  15 operating                                                                    
funds  in the  amount of  $87,152.800; of  the total  nearly                                                                    
$22.1  million were  UGF. In  terms of  UGF, the  difference                                                                    
between   the  FY   14  management   plan   and  the   House                                                                    
subcommittee budget  action was a reduction  of $1.4 million                                                                    
or 5.8  percent. When compared  to the FY 15  adjusted base,                                                                    
the $1.4  million cut  was a reduction  of 6.1  percent. The                                                                    
reductions  made DEC  (on  a percentage  basis)  one of  the                                                                    
state agencies facing the highest budget cuts in FY 15.                                                                         
Representative   Munoz    highlighted   the   subcommittee's                                                                    
recommendation  to cut  $1.4 million  from  the Division  of                                                                    
Water for  a new program that  would have the state  take on                                                                    
dredge-and-fill    responsibilities    from   the    federal                                                                    
government  under Section  404  of the  federal Clean  Water                                                                    
Act. She  detailed that the  division had experienced  a 121                                                                    
percent  budget  increase  over   the  past  10  years.  She                                                                    
supported  the 404  permitting effort,  but  given that  the                                                                    
program  was new  it  was  the first  to  be cut.  Estimated                                                                    
future  costs  of  the  program were  $1.8  million  a  year                                                                    
starting in  FY 16  and increasing to  $7.9 million  a year.                                                                    
She  noted  that  the commissioner  was  working  to  locate                                                                    
alternatives for reduction. She  noted that an amendment may                                                                    
be presented to the committee  for a one-time increment. She                                                                    
relayed  that  it  had  been a  pleasure  working  with  the                                                                    
committee  and  DEC  leadership.   She  referred  to  lively                                                                    
discussions on  the future  of the  oil spill  response fund                                                                    
(she  had introduced  legislation  in response  to make  the                                                                    
fund  solvent) and  the  recent closure  of  the Flint  Hill                                                                    
refinery in North Pole.                                                                                                         
2:12:45 PM                                                                                                                    
Representative Holmes  provided subcommittee recommendations                                                                    
for  the  Department  of   Administration  FY  15  operating                                                                    
budget.  The subcommittee  recommended  an operating  budget                                                                    
totaling $347,298,600.  Of the total, $87,451,000  were UGF;                                                                    
the UGF  difference between  the FY  14 management  plan and                                                                    
the  House subcommittee  budget  action was  an increase  of                                                                    
$697,800  or 0.8  percent. She  provided  highlights of  the                                                                    
subcommittee recommendations:                                                                                                   
     The  subcommittee  accepted the  Department's  requests                                                                    
     for  funds to  accommodate our  state's new  AlaskaCare                                                                    
     contracts,  to add  technological  efficiencies to  the                                                                    
     Division  of   Motor  Vehicles  and  to   transfer  the                                                                    
     management of  the Nome State Office  Building from the                                                                    
    Department of Transportation and Public Facilities.                                                                         
     We were able  to save the state's  money by eliminating                                                                    
     long-time vacant  positions, finding  opportunities for                                                                    
     increased  efficiencies,  and identifying  areas  where                                                                    
     funds  have  been  consistently  lapsing  (particularly                                                                    
     within the Alaska Public Offices Commission).                                                                              
     The   subcommittee  also   approved  the   department's                                                                    
     amendments   to   fund   mandates  from   the   Patient                                                                    
     Protection and Affordable Care Act,  as well as address                                                                    
     the  growing  backlog  problem  within  the  Office  of                                                                    
     Public  Advocacy  and   Public  Defenders  Agency.  The                                                                    
     Department  also   reduced  their  budget   through  an                                                                    
     amendment  to the  Elected Public  Officer's Retirement                                                                    
Representative  Holmes  communicated  that  there  had  been                                                                    
significant  discussion  related  to  working  on  extending                                                                    
broadband throughout  the state. She would  continue to work                                                                    
with the  department on  locating efficiencies.  She thanked                                                                    
the department and LFD for their work on the budget.                                                                            
2:15:04 PM                                                                                                                    
Representative  Holmes  addressed  recommendations  for  the                                                                    
Department  of Law  budget. The  subcommittee recommended  a                                                                    
total FY  15 operating budget  in the amount  of $93,458,400                                                                    
including $59,332,300  UGF. The  UGF difference  between the                                                                    
FY  14 management  plan and  the  House subcommittee  budget                                                                    
action  was a  decrease of  $1,915,600 or  3.1 percent.  She                                                                    
highlighted subcommittee recommendations:                                                                                       
     The  subcommittee  accepted   the  Governor's  FY  2015                                                                    
     budget requests,  which included an increased  need for                                                                    
     legal services  to address prison inmates  returning to                                                                    
     Alaska from  Colorado, added  support for  our Consumer                                                                    
     Protection  Program,  and   continued  support  of  the                                                                    
     Department's  work   related  to  major  oil   and  gas                                                                    
    litigation and bringing North Slope gas to market.                                                                          
     We were able  to save the state's  money by eliminating                                                                    
     long-time vacant positions  and identifying areas where                                                                    
     existing  fund sources  could replace  the Department's                                                                    
     draw from the general fund.                                                                                                
Representative  Holmes thanked  the department  and LFD  for                                                                    
their work on the budget.                                                                                                       
Representative Gara asked about  a $1.1 million GF increment                                                                    
in the  Oil, Gas and  Mining Section that had  been replaced                                                                    
with $1.1  million in Permanent Fund  expenditures. He asked                                                                    
about the reason for the change.                                                                                                
Representative  Holmes  replied   in  the  affirmative.  She                                                                    
detailed that since the establishment  of the Permanent Fund                                                                    
the Department  of Natural Resources  and the  Department of                                                                    
Law's Oil, Gas and Mining  section had taken a percentage of                                                                    
their  funding from  the Permanent  Fund gross  (the pot  of                                                                    
money  that  paid for  the  administrative  expenses of  the                                                                    
Alaska  Permanent Fund  Corporation staff).  Over the  years                                                                    
the Department of Natural Resources  had increased the money                                                                    
substantially to  account for  increased costs;  whereas the                                                                    
Department of Law  had not received an increase  in the last                                                                    
12  years.  The increment  made  the  adjustment to  reflect                                                                    
increased  costs.  She  added that  the  Department  of  Law                                                                    
brought  in   about  $10  million  to   the  Permanent  Fund                                                                    
annually;  therefore, it  had been  a longstanding  practice                                                                    
for the  department to take  a certain portion of  its costs                                                                    
out of the fund source.                                                                                                         
2:18:21 PM                                                                                                                    
Representative  Costello  provided  subcommittee  highlights                                                                    
related  to  the  Department   of  Commerce,  Community  and                                                                    
Economic Development  (DCCED). The total  recommended budget                                                                    
was  $135,528,700;  the  UGF   total  was  $30,135,100.  The                                                                    
difference  in UGF  from the  FY  14 management  plan was  a                                                                    
reduction  of $1,892,900  or 5.9  percent. The  subcommittee                                                                    
recommended  a  decrease  in the  tourism  program  of  $1.6                                                                    
million;  funding  had been  put  in  the base  budget.  The                                                                    
subcommittee  also recommended  a  reduction  to grants  and                                                                    
named recipients by  25 percent in the  current fiscal year;                                                                    
it recommended  an equitable  reduction in  following years.                                                                    
The  purpose was  to transition  grants to  named recipients                                                                    
that the  subcommittee felt belonged in  the capital budget;                                                                    
however,  grant  recipient  Alaska Legal  Services  remained                                                                    
untouched. Other grants included  the Bering Sea Fisherman's                                                                    
Association,  Ilisagvik   College,  Kawerak,   Inc.,  Alaska                                                                    
Marine  Safety  Education  Association, Alaska  Native  Arts                                                                    
Marketing   Grant,  and   the  Southeast   Sustainable  Arts                                                                    
program.  Other  highlights  included   a  denial  of  merit                                                                    
increases to  the Alaska Gasline Development  Corporation in                                                                    
the  amount  of  $627,000.  Additionally,  in  the  language                                                                    
section the  subcommittee recommended a 10  percent decrease                                                                    
to the  Alaska Seafood  Marketing Institute (ASMI)  to match                                                                    
the reduction.                                                                                                                  
Representative Gara  wondered whether  the denied  merit pay                                                                    
increases were  for high salaried  positions. Representative                                                                    
Costello   answered  that   information   provided  to   the                                                                    
subcommittee had  showed the  proposed increases  would have                                                                    
gone to higher paid employees.                                                                                                  
2:21:18 PM                                                                                                                    
Representative Costello addressed  the Department of Natural                                                                    
Resources  budget  subcommittee recommendations.  The  total                                                                    
budget was  $159,361,300 and total UGF  was $77,978,700. The                                                                    
difference  in UGF  from the  FY  14 management  plan was  a                                                                    
reduction of  $1,985,100 or  2.5 percent.  Budget highlights                                                                    
included an acceptance of  the governor's requested deletion                                                                    
of the  Gas Pipeline Project  Office for the  Alaska Gasline                                                                    
Inducement  Act  (AGIA) in  the  amount  of $2,616,800.  The                                                                    
subcommittee  recommendations  included  a  fund  change  in                                                                    
Parks Management and Access; $250,000  UGF would be replaced                                                                    
with $250,000 in program receipts.                                                                                              
Representative   Gara  asked   for  verification   that  the                                                                    
governor had  proposed and the  subcommittee had  accepted a                                                                    
reduction of  approximately $670,000 in  standalone pipeline                                                                    
funds in order to move forward with a larger pipeline.                                                                          
Representative Costello replied in the affirmative.                                                                             
2:23:14 PM                                                                                                                    
Co-Chair Stoltze  addressed the Department of  Fish and Game                                                                    
(DFG) budget. He relayed that  the subcommittee had held six                                                                    
or  seven  hearings with  the  department.  He believed  the                                                                    
meetings were  the only venue  the House would hear  an open                                                                    
discussion  of  some  contentious   Cook  Inlet  issues  and                                                                    
federal  litigation issues  also related  to Cook  Inlet. He                                                                    
believed the media  and members had been unaware  of some of                                                                    
the  fisheries issues  that drove  most  of the  contentious                                                                    
issues  on Cook  Inlet.  He appreciated  the opportunity  to                                                                    
discuss the  issues. The total  budget was  $214,571,200 and                                                                    
total   UGF  was   $79,387,800.  He   elaborated  that   the                                                                    
department had  cut its budget  by absorbing  positions that                                                                    
had been  vacant. The subcommittee had  asked the department                                                                    
to identify $1 million in cuts  that would do the least harm                                                                    
and  provide  the  most   flexibility.  The  department  had                                                                    
identified  the  following  unallocated  budget  reductions:                                                                    
$345,000  to   commercial  fisheries,  $275,000   to  sports                                                                    
fisheries, $220,000  to wildlife conservation,  and $160,000                                                                    
to   administrative   and   support   board   sections.   He                                                                    
communicated  that there  would not  be a  Cook Inlet  sport                                                                    
fish  cycle  until  2016  or  2017,  which  would  absorb  a                                                                    
significant  amount  of costs  in  the  fisheries and  board                                                                    
Representative  Gara asked  about unallocated  reductions of                                                                    
approximately   $900,000.  He   wondered  if   any  of   the                                                                    
reductions would impact the existing king salmon studies.                                                                       
Co-Chair Stoltze  replied that the  bulk of the  king salmon                                                                    
studies were funded  in the capital budget.  He believed DFG                                                                    
would have  the ability  to absorb  a significant  amount of                                                                    
the unallocated reductions. He  stated that departments were                                                                    
adept at  feeding off of  capital budgets. He  detailed that                                                                    
the  legislative  process  had  changed  the  research  from                                                                    
exclusively focusing  on king salmon  to focusing  on salmon                                                                    
in general.  He elaborated that  certain areas of  the state                                                                    
had problems with coho and  sockeye salmon. The subcommittee                                                                    
had given the department a  mandate to expand the studies to                                                                    
salmon stocks throughout the state.                                                                                             
Representative  Gara   asked  if  funds  for   the  expanded                                                                    
research  on salmon  species were  included  in the  capital                                                                    
Co-Chair  Stoltze replied  that the  funds would  be in  the                                                                    
capital budget.  The funds had  been allocated to  salmon in                                                                    
general. He  noted that  there had  been broad  consensus in                                                                    
the House and  Senate on the decision the  prior session. He                                                                    
believed the policy step was appropriate.                                                                                       
2:29:04 PM                                                                                                                    
Co-Chair Stoltze  addressed the Alaska Court  System budget.                                                                    
He noted  that the court system  did not go through  the OMB                                                                    
process; therefore, all increments  were advanced forward to                                                                    
the subcommittee. He commented  on the challenging nature of                                                                    
the court  budget. Total funds  were $115,246,600  and total                                                                    
UGF  was  $111,436,000.  He  communicated  that  the  budget                                                                    
represented a slight  increase, but that it  was primarily a                                                                    
maintenance budget; the vast majority  of the increments had                                                                    
been denied.  There had been discussion  related to security                                                                    
issues,  but he  felt it  was important  to not  discuss the                                                                    
types of  security too  openly. He  remarked that  there had                                                                    
not  been many  substantial  reductions  located within  the                                                                    
2:31:25 PM                                                                                                                    
Representative  Guttenberg addressed  the partial  denial of                                                                    
the  bandwidth  expansion.   He  noted  statewide  testimony                                                                    
regarding the need.  He wondered if there was a  plan in the                                                                    
works to help address the deficiency.                                                                                           
Co-Chair  Stoltze   had  hoped   a  plan  would   have  been                                                                    
developed.  He recalled  that the  court system  had relayed                                                                    
that  the  issue  was  important   to  all  of  the  justice                                                                    
agencies;  however,   the  subcommittee  had  not   heard  a                                                                    
concomitant concern  from the  Department of  Public Safety,                                                                    
the Department of Law, or  the Department of Corrections. He                                                                    
believed the court  system should devise a  better plan with                                                                    
all administration  of justice  agencies. He opined  that it                                                                    
could not just  be one of the agencies,  especially one that                                                                    
did  not fall  under OMB.  He hoped  the court  system would                                                                    
take the guidance  offered by the legislature  earlier on in                                                                    
the current  session and that  it would come forward  with a                                                                    
plan. He  stated that  money had been  given in  a piecemeal                                                                    
approach.  He understood  that bandwidth  was an  increasing                                                                    
concern, but he believed  that other departments involved in                                                                    
the administration of justice should  be included in a plan.                                                                    
He  stressed that  increased coordination  and justification                                                                    
was  needed  in  order  to provide  additional  funds  to  a                                                                    
2:34:13 PM                                                                                                                    
Representative  Guttenberg   noted  that   many  legislators                                                                    
shared  the  same  frustration  related to  the  lack  of  a                                                                    
cohesive plan.                                                                                                                  
Representative   Holmes  added   that   the  Department   of                                                                    
Administration subcommittee had communicated  to DOA that it                                                                    
needed  to take  a  leading role  in  finding a  system-wide                                                                    
2:35:03 PM                                                                                                                    
Co-Chair  Austerman  discussed subcommittee  recommendations                                                                    
for the Office of the  Governor. The subcommittee approved a                                                                    
total budget  of $32,748,900 including UGF  of slightly over                                                                    
$32 million. The  $2.5 million UGF increase above  the FY 14                                                                    
management  plan  was  due  largely to  a  request  of  $3.7                                                                    
million  for upcoming  primary  and  general elections.  The                                                                    
budget included  the reductions of eight  positions and just                                                                    
under $655,000 UGF. Additionally,  there was a UGF reduction                                                                    
of $562,000  to various  expenditures. The  subcommittee had                                                                    
changed the  governor's $3 million request  for the Domestic                                                                    
Violence and Sexual  Assault Initiative from a  base item to                                                                    
a  one-time  expenditure.  The subcommittee  recognized  the                                                                    
importance of the issue and  believed it should be discussed                                                                    
annually and  that it should  not be buried in  the budget's                                                                    
Representative   Gara  asked   about  the   change  of   the                                                                    
governor's  request.  He  understood  that  the  performance                                                                    
measure report was  necessary. He wondered if  the funds had                                                                    
been included  in the  base budget or  designated as  a one-                                                                    
time increment the prior year.                                                                                                  
Co-Chair Austerman replied that the  item had been funded as                                                                    
a one-time increment the previous year.                                                                                         
Representative  Gara asked  for verification  that the  item                                                                    
had been a one-time increment in the past few years.                                                                            
Co-Chair Austerman replied in the affirmative.                                                                                  
2:37:24 PM                                                                                                                    
Co-Chair  Austerman detailed  the  subcommittee request  for                                                                    
the  Legislature. The  subcommittee  had approved  an FY  15                                                                    
budget of  $76,676,200 including  a UGF  total of  just over                                                                    
$76.2 million. There  was a UGF increase of  $1.8 million or                                                                    
2.5 percent  over the FY  14 management plan. He  noted that                                                                    
an agency  audit bill had  been approved the  previous year,                                                                    
which  represented $720,000  of the  increase. He  addressed                                                                    
the   current   remodel   of   the   Anchorage   Legislative                                                                    
Information Office  (LIO); $3.4  million was allocated  to a                                                                    
rent  increase.  The budget  included  $2.5  million in  UGF                                                                    
program  reductions that  cut 3.15  percent from  the FY  15                                                                    
budget request; $250,000  had been cut from  the Division of                                                                    
Legislative   Audit,  $950,000   had  been   cut  from   the                                                                    
Legislative Finance Division to  be split evenly between the                                                                    
House and  Senate Finance Committees,  and $1.3  million had                                                                    
been eliminated  from committee expenses. He  noted that the                                                                    
Office  of  the  Governor   and  the  Legislature  primarily                                                                    
operated with general funds.                                                                                                    
Representative Gara understood that there  was no way out of                                                                    
the Anchorage LIO building contract.  He pointed to the $3.5                                                                    
million rent  increase and asked  if there would  be utility                                                                    
increases  of approximately  $700,000.  He  wondered if  the                                                                    
utility  increase would  not occur  in  the upcoming  fiscal                                                                    
year  as  the building  would  not  be inhabited  until  the                                                                    
following year.  He thought the  total lease  increase would                                                                    
be roughly $4 million.                                                                                                          
Co-Chair Austerman would follow up on the question.                                                                             
Co-Chair  Stoltze remarked  that he  and Co-Chair  Austerman                                                                    
were not the authorities on the issue.                                                                                          
Co-Chair Austerman added that the  Anchorage LIO lease was a                                                                    
Legislative Council issue.                                                                                                      
2:40:18 PM                                                                                                                    
Representative Wilson addressed  the Department of Education                                                                    
and  Early Development  (DEED)  budget recommendations.  The                                                                    
total  budget was  $349,429,400, which  did not  include the                                                                    
forward  funding of  the foundation  formula. Total  UGF was                                                                    
$60,319,400. The total  was a decrease of  $2,214,800 or 0.6                                                                    
percent from  the FY 14  management plan. She noted  that $3                                                                    
million   had  been   added   to   the  Alaska   Performance                                                                    
Scholarship  and   $1.5  million   had  been   included  for                                                                    
AlaskAdvantage  Education   Grant  program   for  need-based                                                                    
scholarships. The subcommittee had  removed $1.1 million for                                                                    
the Alaska  Learning Network. She detailed  that the program                                                                    
was  currently   housed  under  the  University   of  Alaska                                                                    
Southeast.  She believed  the  program  had moved  locations                                                                    
annually.  She   communicated  that  the   university  could                                                                    
continue  the program  if  it  did one  of  two things.  The                                                                    
program could  be transferred to  Ketchikan; the  campus was                                                                    
currently providing  the most related programs,  which would                                                                    
allow it to  take advantage of $5 million  of the governor's                                                                    
initiative (the initiative enabled  school districts to help                                                                    
other   school  districts).   The  second   option  involved                                                                    
increasing the  course cost from  $150 to $300,  which would                                                                    
generate $180,000; a new course cost $15,000.                                                                                   
Representative Wilson discussed that  DEED was the recipient                                                                    
of  many  grants. She  stated  that  there were  no  outcome                                                                    
measurements  associated with  the  grants.  She believed  a                                                                    
further discussion was needed  to determine whether DEED was                                                                    
the appropriate recipient.                                                                                                      
Representative  Munoz asked  how  the  digital learning  cut                                                                    
would  impact  the  mining   training  program  and  digital                                                                    
learning  for the  course. She  relayed that  the class  was                                                                    
offered   in  Juneau,   but  it   was  available   digitally                                                                    
statewide; the program offered dual  credits for high school                                                                    
Representative Wilson  replied that  the mining  program was                                                                    
not a  part of the  Alaska Learning Network. She  had looked                                                                    
online and  the program  appeared to  be with  Department of                                                                    
Labor  and Workforce  Development.  She would  follow up  to                                                                    
verify  her understanding.  She stated  that if  the program                                                                    
was successful  it would be  able to utilize  funds provided                                                                    
from school  districts for high school  students. She stated                                                                    
that $4 million had been  spent on the learning network. She                                                                    
opined that the program should be self-sustainable.                                                                             
Representative  Munoz would  follow  up with  Representative                                                                    
Wilson and with the UAS chancellor.                                                                                             
2:43:32 PM                                                                                                                    
Representative  Wilson  spoke  to  recommendations  for  the                                                                    
Department of  Labor and  Workforce Development  (DLWD). She                                                                    
stated  that  cuts  to  DWLD   and  DEED  were  coming  from                                                                    
programs. The  total budget  was $182,689,200  including UGF                                                                    
of $32,012,700.  The budget had  been reduced  by $8,074,000                                                                    
or  4.2 percent.  The  subcommittee  had removed  $2,391,700                                                                    
from the Alaska  Youth First program. She  detailed that the                                                                    
program  funded  career  counselors   in  the  schools.  The                                                                    
subcommittee believed communication  needed to be increased.                                                                    
She  stated that  the counselors  should  focus on  careers,                                                                    
college,  and   technical  programs.  She  pointed   to  the                                                                    
Technical   Vocational   Education   Program   (TVEP);   the                                                                    
subcommittee felt  that if the grants  were more competitive                                                                    
the   technical   programs   would  be   in   schools.   The                                                                    
subcommittee surmised that  increased career counselors were                                                                    
not needed if good schools could market their own programs.                                                                     
Representative  Costello  asked  whether  the  Alaska  Youth                                                                    
First program was a grant  program offering funds to various                                                                    
Representative Wilson replied that  there were 18 recipients                                                                    
under the  Alaska Youth  First program.  She stated  that it                                                                    
was  difficult to  determine how  many students  the program                                                                    
was helping.  She detailed that  cost estimates  per student                                                                    
ranged from  $40 to  $5,000. She stated  that there  were no                                                                    
outcome  measurements available  to  justify continuing  the                                                                    
Representative  Costello   asked  if   some  of   the  grant                                                                    
recipients could be placed in the capital budget.                                                                               
Representative    Wilson    answered    that    with    good                                                                    
representatives the  recipients could  go where  they wanted                                                                    
for  funds.  The  recipients were  primarily  counselors  in                                                                    
schools replacing  other areas that would  receive education                                                                    
funding.  She  stated  that  the  money  would  actually  be                                                                    
funding positions;  therefore, she did not  know whether the                                                                    
program  would  qualify  for  capital  funds.  Some  of  the                                                                    
programs were  already in  TVEP and  the State  Training and                                                                    
Employment Program. She added  that there were a significant                                                                    
number of state matching funds in several departments.                                                                          
Representative Costello  relayed that DCCED was  phasing out                                                                    
a program  that the subcommittee  was hoping to fund  in the                                                                    
capital  budget. The  DCCED subcommittee  was hoping  to get                                                                    
one of  the programs into  TVEP. She understood that  one of                                                                    
the  recipients  was Nine  Star,  which  was an  agency  not                                                                    
associated with a specific school.                                                                                              
2:47:12 PM                                                                                                                    
Representative  Gara expressed  concern about  a cut  to the                                                                    
Alaska Youth First Program. He  shared that schools had lost                                                                    
600  educators in  the past  three years  due to  a lack  of                                                                    
education funding;  a number of  the positions had  been job                                                                    
and career counselors. He wondered  how schools would absorb                                                                    
the loss of counselors in the  youth first program on top of                                                                    
the  counselors they  had lost  due to  a lack  of education                                                                    
Representative  Wilson could  not  tell if  the program  was                                                                    
duplicative  because it  had  not been  used  in all  school                                                                    
districts. She did not know  how many counselors each of the                                                                    
districts  had.  Once  the  subcommittee  had  gone  through                                                                    
federal  matching  for  state funds  only  three  areas  had                                                                    
remained;  she  pointed  to the  construction  academy,  the                                                                    
youth  first  program,  and  training  for  youths  entering                                                                    
adulthood. She  believed the  state funded  training schools                                                                    
should be  responsible for outreach  to students  related to                                                                    
their programs.  She opined  that increased  competition for                                                                    
grants would incentivize training  schools to work harder to                                                                    
recruit students. She did not  understand why there would be                                                                    
a   counselor   specifically   for   careers   and   another                                                                    
specifically  for  college;  a  counselor  should  have  the                                                                    
ability to help a student determine multiple options.                                                                           
Representative  Gara asked  if there  was evidence  that the                                                                    
counselors  in  the  Alaska Youth  First  program  had  been                                                                    
Representative Wilson replied that  the subcommittee had not                                                                    
been provided with any data  on the program. She stated that                                                                    
unlike the construction academy the program was not hands-                                                                      
on. She relayed  that the construction academy  would be the                                                                    
last  area to  cut  general fund  money  the following  year                                                                    
until the  legislature began  cutting programs  with federal                                                                    
matching  funds   and  ones  that   were  required   by  the                                                                    
department. She stated that it  was coming down to what DWLD                                                                    
and DEED were mandated to  do and what remained outside that                                                                    
Representative  Munoz  referred to  Representative  Wilson's                                                                    
earlier testimony  about money for a  specific program being                                                                    
used in Ketchikan versus at  UAS. She wondered which program                                                                    
Representative Wilson had been discussing.                                                                                      
Representative Wilson  replied that  she had  been referring                                                                    
to  the governor's  $5  million  digital initiative  capital                                                                    
project for  DEED. The digital  initiative asked  for school                                                                    
districts  to  reach  out to  other  school  districts.  She                                                                    
explained that  if the Alaska  Learning Network  was located                                                                    
in Ketchikan  it could  apply for a  grant that  would allow                                                                    
the  program  to  continue  its  current  outreach.  If  the                                                                    
program remained  at UAS she  believed it would  not qualify                                                                    
for the grant because it was not a school district.                                                                             
2:52:03 PM                                                                                                                    
Representative  Edgmon spoke  to  the  Department of  Public                                                                    
Safety  subcommittee recommendations.  The total  budget was                                                                    
$206,111,800  including  UGF  of  $171,100,800.  The  budget                                                                    
represented a  UGF decrease of $1,192,900  or 0.007 percent.                                                                    
He relayed that  most of the reduction came  from the denial                                                                    
of  a  request  for  15  additional  Village  Public  Safety                                                                    
Officer   (VPSO)  positions   totaling  $3.1   million.  The                                                                    
positions  had been  denied  given  that approximately  one-                                                                    
quarter  of the  current authorized  positions were  vacant.                                                                    
Given  the  current  vacancy  factor  the  subcommittee  had                                                                    
determined  that it  was unnecessary  to provide  additional                                                                    
positions. A  request for a VPSO  oversight trooper totaling                                                                    
approximately $350,000 had also been denied.                                                                                    
Representative  Edgmon  communicated that  the  subcommittee                                                                    
had  accepted   two  decrements   for  two   patrol  vessels                                                                    
including  the Stimpson  and  the  Woldstad. The  decrements                                                                    
were made with  the intent that he would  work with Co-Chair                                                                    
Austerman  on  bringing something  back  to  the full  House                                                                    
Finance  Committee to  address  the  situation. He  detailed                                                                    
that  currently  the  patrol   vessel  Stimpson  resided  in                                                                    
Unalaska; the  department claimed  that if  it was  moved to                                                                    
Kodiak  savings  of  approximately  $500,000  in  personnel,                                                                    
moorage, and fuel costs would  occur. Unalaska had disagreed                                                                    
with  the cut  given that  the  Stimpson was  the one  large                                                                    
vessel the state had to  conduct search and rescue and other                                                                    
associated activities in the Bering  Sea and Aleutian Island                                                                    
waters. The subcommittee had agreed  with the assessment and                                                                    
hoped the  committee would  be able  to develop  a solution.                                                                    
The older  Woldstad vessel currently  resided in  Kodiak. He                                                                    
detailed that $2.4 million had  been appropriated for repair                                                                    
work  the previous  year;  $100,000 of  the  funds had  been                                                                    
spent  and an  additional $1.3  million in  repair work  was                                                                    
needed.   The   subcommittee   did  not   agree   with   the                                                                    
department's  recommendation  that  the Woldstad  should  be                                                                    
replaced with  a smaller 58-foot  vessel that would  be used                                                                    
in the gulf.  He spoke to high intensity storms  in the open                                                                    
waters of  the gulf [that  made using a smaller  vessel less                                                                    
Representative Edgmon  referred to a $2.2  million amendment                                                                    
that had been  included in the FY 14  supplemental budget to                                                                    
fund the Alaska Bureau of  Highway Patrol with GF money. The                                                                    
subcommittee transacted  an amendment  that would  allow the                                                                    
$2.2  million  to go  forward  in  the supplemental  budget,                                                                    
which would keep the 19  troopers associated with the bureau                                                                    
intact.  The subcommittee  had maintained  $537,500 for  two                                                                    
increments for  the Council on Domestic  Violence and Sexual                                                                    
Assault  (CDVSA).   The  increments  pertained   to  funding                                                                    
operating expenses  for women's  shelters and  for expanding                                                                    
programs for children entering shelters with adults.                                                                            
2:56:58 PM                                                                                                                    
Representative  Wilson wondered  if  the supplemental  funds                                                                    
for troopers backfilled any federal funding.                                                                                    
Representative Edgmon replied in the affirmative.                                                                               
Representative   Edgmon   addressed    the   Department   of                                                                    
Corrections  budget. The  subcommittee  recommended a  total                                                                    
budget of  $331,095,900 including  UGF of  $295,816,100. The                                                                    
budget  represented a  UGF decrease  of $1,126,800  or 0.004                                                                    
percent from the FY 14  management plan. He addressed a $2.5                                                                    
million savings  with the Point MacKenzie  Correctional farm                                                                    
related  to the  transfer of  112 inmates  and corresponding                                                                    
administrative staff to the  Goose Creek Correctional Center                                                                    
(GCCC);  inmates would  be  bused back  to  the farm  during                                                                    
farming season  to continue their  work. He stated  that the                                                                    
subcommittee had essentially  accepted the governor's budget                                                                    
with  no  changes.  He  pointed out  that  the  transfer  of                                                                    
approximately  1,050 prisoners  from  Hudson, California  to                                                                    
GCCC was  complete; $3.3 million  had been  transferred from                                                                    
the out-of-state  contractual component of  the department's                                                                    
budget to other areas to  enable the transfer of the inmates                                                                    
to GCCC.  He relayed  that there  continued to  be 15  to 20                                                                    
special  needs prisoners  residing  out-of-state at  various                                                                    
2:59:36 PM                                                                                                                    
Representative Thompson spoke to  the Department of Military                                                                    
and  Veterans Affairs  budget. The  subcommittee recommended                                                                    
total funds of 60,387,800  including UGF of $24,879,800. The                                                                    
difference  in UGF  from the  FY 14  management plan  was an                                                                    
increase  in $2,605,500  or 11.7  percent. The  subcommittee                                                                    
had accepted  the governor's  amended proposal  with several                                                                    
adjustments. He  detailed that the subcommittee  had reduced                                                                    
the Alaska National Guard  benefit appropriation by $142,600                                                                    
UGF    (from   $769,900    to   $627,300)    for   actuarial                                                                    
recommendations.  The  subcommittee had  changed  $1,238,300                                                                    
from UGF to  GF match for the Alaska  Military Youth Academy                                                                    
in  order to  accurately reflect  required federal  matching                                                                    
funds. The  subcommittee had removed  all UGF  operating and                                                                    
sustainment  funding from  the  base budget  for the  Alaska                                                                    
Aerospace Corporation  and had  added the $6.1  million back                                                                    
as  a  one-time  increment.  All  of  the  governor's  other                                                                    
requests  had  been  accepted.  Total  reductions  from  the                                                                    
governor's amended budget were  $142,600 UGF. The total fund                                                                    
decrease  from  the adjusted  base  was  $8,894,200 or  12.8                                                                    
percent; $2.2 million  of the figure was  UGF primarily from                                                                    
the Alaska Aerospace Corporation.                                                                                               
Representative  Gara   referred  to  the   Alaska  Aerospace                                                                    
Corporation rocket launch facility  and noted there had been                                                                    
one launch  in the  past three  years. The  recent multiyear                                                                    
contract only included one launch.  He wondered if there was                                                                    
a way  to appropriate less  than $6 million to  maintain the                                                                    
facility so  the corporation could either  secure additional                                                                    
contracts or come up with a  way to sell the facility to the                                                                    
private  sector. He  wondered if  it was  necessary to  fund                                                                    
employees when rockets were not being launched.                                                                                 
Representative  Thompson replied  that  there  was a  launch                                                                    
scheduled  for the  fall that  required  preparation at  the                                                                    
facility  three months  in advance.  He stated  that without                                                                    
personnel  it was  difficult for  the corporation  to market                                                                    
for future launches. Two years  earlier the funding had been                                                                    
$10  million;  the  corporation had  committed  to  reducing                                                                    
funds by $2 million per  year with the understanding that it                                                                    
would  close if  commitments were  not obtained.  The FY  15                                                                    
increment of  $6 million would  be reduced to $4  million in                                                                    
the following  year and to  $2 million the year  after that.                                                                    
The corporation's  director Craig Campbell had  committed to                                                                    
closing or selling the facility  if it was not successful by                                                                    
the time funds  ramped down. He explained  that the director                                                                    
was  working on  looking for  additional options  that would                                                                    
generate  revenue  at the  facility.  He  detailed that  Mr.                                                                    
Campbell had taken over at  a point when the corporation had                                                                    
not sought commercial launch activity  and he had turned the                                                                    
program ideas around.                                                                                                           
3:04:37 PM                                                                                                                    
Representative Thompson  reported the Department  of Revenue                                                                    
subcommittee  recommendations   for  the  FY   15  operating                                                                    
budget.   The  subcommittee   recommended  total   funds  of                                                                    
$371,685,000 including UGF  of $32,236,400. The subcommittee                                                                    
had  accepted  the  governor's recommendation  with  several                                                                    
adjustments. There  was a fund  source change to  reduce UGF                                                                    
by  $28,600 and  to increase  DGF by  $28,600 for  the Pick,                                                                    
Click and  Give program  within the Permanent  Fund Dividend                                                                    
Division. The subcommittee had removed  $125,000 of UGF from                                                                    
Natural  Gas  Commercialization   base  funding  for  Alaska                                                                    
Gasline   Inducement   Act  (AGIA)   audit   reimbursements;                                                                    
$125,000 UGF  had been  added as  a one-time  increment. All                                                                    
other governor's requests had  been accepted. The difference                                                                    
totaled $22,767,000  or a 6.5  percent increase  between the                                                                    
FY 14 management plan and  the subcommittee's recommended FY                                                                    
15 budget.                                                                                                                      
Representative Guttenberg  wondered if  audits for  AGIA had                                                                    
ended. He  asked if there  was any ongoing work  that needed                                                                    
to  be  completed.  He  wondered  if  money  had  been  left                                                                    
somewhere in the budget.                                                                                                        
Representative Thompson replied that  money had been left in                                                                    
the budget  to complete FY  15 audits. He  communicated that                                                                    
the audits should be completed in the current year.                                                                             
Vice-Chair Neuman spoke to  the Department of Transportation                                                                    
and Public  Facilities budget. The  subcommittee recommended                                                                    
a FY 15 budget  totaling $629,119,700 including $278,863,400                                                                    
UGF,   $68,096,700  DGF,   $279,341,000  other   funds,  and                                                                    
$2,845,600 in  federal funds. The  budget represented  a UGF                                                                    
decrease of  1.5 percent or  $4,190,600. He shared  that the                                                                    
subcommittee had  held six meetings with  the department and                                                                    
recommended accepting  the governor's proposed  request with                                                                    
additional  recommendations.  The  subcommittee  recommended                                                                    
replacing  $900,000  UGF  with capital  improvement  project                                                                    
receipt  authority.  The  action fell  under  administrative                                                                    
services and  design and  engineering components  within the                                                                    
department; costs  were project  specific and  accounted for                                                                    
human  resources,   information  technology   training,  and                                                                    
direct  project  costs.  The subcommittee  believed  it  was                                                                    
appropriate to provide  the state with the  ability use some                                                                    
of  the funds  to  cover administrative  costs in  federally                                                                    
funded projects. He noted that  the funding cap had not been                                                                    
reached for engineering and accounting;  funds would be used                                                                    
for future adjustments.                                                                                                         
Vice-Chair  Neuman pointed  to  a reduction  in funding  for                                                                    
state highways,  aviation, and  facilities by  $800,000 UGF.                                                                    
The  subcommittee recommended  that the  department increase                                                                    
cost-control  and   efficiency  measures   including  summer                                                                    
overtime  reductions. He  detailed  that  the reduction  had                                                                    
been spread  across Central, Northern, and  Southeast Alaska                                                                    
regions; the  reduction was weighted to  ensure that impacts                                                                    
were   proportional.  The   Central  region   would  receive                                                                    
$311,700, the  Northern region  would receive  $397,300, and                                                                    
Southeast would receive $91,000.                                                                                                
Vice-Chair  Neuman addressed  an elimination  of $1  million                                                                    
UGF  for  marine  vessel  operations.  The  reduction  would                                                                    
eliminate gift shops on  the Columbia, Kennicott, Malaspina,                                                                    
Matanuska, and  Taku ferries. The  reduction did  not impact                                                                    
cafeterias  on the  vessels. The  subcommittee had  explored                                                                    
the  possibility of  leasing vending  machines from  private                                                                    
industries  or adding  rooms to  increase ferry  revenue. He                                                                    
stated  that  the  ferry  system   had  an  online  giftshop                                                                    
available for consumers. He believed  the gift shops reduced                                                                    
the amount of shopping  passengers did in local communities.                                                                    
He  noted that  LFD backup  materials had  been provided  to                                                                    
3:11:55 PM                                                                                                                    
Representative  Guttenberg spoke  to the  $800,000 reduction                                                                    
related  to overtime  summer costs.  He was  concerned about                                                                    
where the  overtime costs would  be cut. He wondered  if the                                                                    
subcommittee  had identified  specific costs  that would  be                                                                    
cut. He  discussed private sector  projects overseen  by the                                                                    
department and major maintenance done by department crews.                                                                      
Vice-Chair Neuman  replied that the subcommittee  had worked                                                                    
to cut  the $800,000  proportionately throughout  the state.                                                                    
The overtime  reductions were  a recommendation  provided by                                                                    
the  department; the  reduction would  allow the  department                                                                    
maximum  flexibility to  absorb cuts.  He did  not know  how                                                                    
overtime would work out on specific projects.                                                                                   
Vice-Chair  Neuman addressed  the Department  of Health  and                                                                    
Social   Services  (DHSS)   budget.   He  thanked   Co-Chair                                                                    
Austerman for his recommendation  that the subcommittee meet                                                                    
as  a committee  of the  whole. He  shared that  members had                                                                    
traveled throughout the state over  the past interim to look                                                                    
at close to  all of the department's divisions.  He read the                                                                    
following detail related to the budget totals:                                                                                  
     The   House   Finance   Health  and   Social   Services                                                                    
     Subcommittee  recommended  a  total  FY  15  Budget  of                                                                    
     $2,661,600.9  with a  total  UGF  of $1,249,955.7.  The                                                                    
     difference  in  UGF  from  FY  14  Management  Plan  is                                                                    
     $13,459.1 which is a 1.1%  increase in formula and non-                                                                    
     formula funding.  This takes into account  the increase                                                                    
     in  Medicaid Services.  The Subcommittee  recommended a                                                                    
     $2 million  dollar reduction  in energy  assistance and                                                                    
     further the Subcommittee  recommended reductions in the                                                                    
     amount of $4,489.0 from  the $390,035.7 Non-Formula UGF                                                                    
     which is -0.1%.                                                                                                            
Vice-Chair   Neuman   relayed    that   the   subcommittee's                                                                    
recommended UGF  funds were $6,489,200 or  0.5 percent lower                                                                    
than the governor's proposed FY 15 budget.                                                                                      
3:16:46 PM                                                                                                                    
Vice-Chair   Neuman  relayed   that  the   subcommittee  had                                                                    
accepted  the  governor's  proposed budget  with  additional                                                                    
recommendations. He explained that conditional language had                                                                     
been added to the governor's proposed budget:                                                                                   
     Added  Conditional Language  allowing the  Commissioner                                                                    
     the discretion  to transfer  up to  $50,000,000 between                                                                    
     appropriations in  the Department of Health  and Social                                                                    
     Services.  This  is to  give  the  Department a  little                                                                    
     cover with so much  uncertainty happening in Health and                                                                    
     Social Services  on the Federal Level  with things like                                                                    
     sequestration,  the Affordable  Care Act,  and what  is                                                                    
     happening in the Health Care Marketplace.                                                                                  
Vice-Chair Neuman felt that the change would save DHSS                                                                          
money by providing them with flexibility at the end of the                                                                      
budget season. He discussed reductions to the budget:                                                                           
     Behavioral Health/Behavioral Health Grants:                                                                                
        · Decremented $1,043.0 GF/MH and reflect savings                                                                        
          from the reallocation  of funding from residential                                                                    
          treatment   services   to   intensive   outpatient                                                                    
          substance abuse treatment services.                                                                                   
             o This reallocation will allow for the                                                                             
               treatment  of  approximately  223  additional                                                                    
               individuals in  outpatient services providing                                                                    
               greater  capacity  at  the  outpatient  level                                                                    
               with the  intention of shifting the  curve of                                                                    
               the  number of  people requiring  residential                                                                    
               treatment  while  working  on a  program  for                                                                    
               access to residential treatment.                                                                                 
        · Decrement $1,000.0 GF/MH in the Behavioral Health                                                                     
          Grants  allocation. This  is being  done to  bring                                                                    
          this  allocation  into  alignment by  taking  into                                                                    
          account   non-performing  and/or   underperforming                                                                    
          grants  in  Behavioral  Health  Grants  Component.                                                                    
          The  Subcommittee  Plan  that has  been  presented                                                                    
          shows  just  under   $138  Million  in  Behavioral                                                                    
          Health (a 2.4% reduction)  with $84 million in the                                                                    
          grants  line  (a  3.9%  reduction).    During  the                                                                    
          Division's  presentation  it  was noted  that  the                                                                    
          service   population    for   the    Division   is                                                                    
          approximately  26,329  individual   and  that  the                                                                    
          average cost for  services excluding prevention is                                                                    
          $9,165 per  person. There  is a  Behavioral Health                                                                    
          Systems  Assessment happening  now that  will help                                                                    
          identify  areas of  need in  our State  along with                                                                    
          the Department's  review of  the grants  will help                                                                    
          bring the funding  into alignment.    Keep in mind                                                                    
          that  there is  flexibility  to  move funding,  if                                                                    
          there    are    specific   needs,    within    the                                                                    
          appropriation    and    with    the    recommended                                                                    
          conditional language.                                                                                                 
     Public Assistance/Energy Assistance Program:                                                                               
     Reduce Public Assistance Energy Assistance Program for                                                                     
     Alaska Heating Assistance by $2,000.0.                                                                                     
        · There is $13,164.30 in Federal Funds which is the                                                                     
          federally funded portion  of the program providing                                                                    
          assistance  to  those   with  incomes  below  150%                                                                    
          Federal  Poverty  Level  (The Division  of  Public                                                                    
          Assistance  issued  payments averaging  $1,253  to                                                                    
          11,449 LIHEAP  (Low Income Home  Energy Assistance                                                                    
          Program)  households (incomes  below 150%  Federal                                                                    
          Poverty  Level) and  $13,358.5 GF  to serve  those                                                                    
          with  income  levels  between  151%  and  225%  of                                                                    
          Federal  Poverty. (Division  of Public  Assistance                                                                    
          served 2,304 households  with incomes between 151%                                                                    
          and  225% Federal  Poverty Level  with an  average                                                                    
          payment of $678).                                                                                                     
    Public Health/Health Plan and Systems Development:                                                                          
     Reduced by $1,200.0 UGF, a portion of the Supporting                                                                       
     Health Care Access through Loan Repayment Program                                                                          
     (SHARP I & II).                                                                                                            
        · Sharp I is the federally funded portion of this                                                                       
        · Sharp II was enacted in 2012 with the intention                                                                       
          of increasing care in Rural Alaska.                                                                                   
        · Interestingly this program was identified in the                                                                      
          Indirect  Expenditures  Research  that  should  be                                                                    
Vice-Chair Neuman relayed  that the SHARP I  and II programs                                                                    
were  intended  to  assist  medical  personnel  in  reducing                                                                    
educational costs if they returned  to work in Alaska. SHARP                                                                    
I  was  a  50/50  federal/state   match;  SHARP  II  was  an                                                                    
additional   funding  of   $1.2  million.   The  recommended                                                                    
reduction would come out of  the SHARP II program budget. He                                                                    
discussed additional reductions:                                                                                                
     Public Health/Community Health Grants:                                                                                     
     Decremented $1,000.0 UGF (50% of the program) from the                                                                     
     Community Health Aide Training and Supervision Grants.                                                                     
        · The needs and uses of this program have changed                                                                       
          considerably  since it  was  established in  1984.                                                                    
          The use  of modern technology methods  of training                                                                    
          such   as   Tele-health    and   online   training                                                                    
          opportunities allow this  program to continue with                                                                    
          reduced funding.                                                                                                      
3:22:06 PM                                                                                                                    
Vice-Chair Neuman elaborated that  originally there had been                                                                    
$2 million  included for the Community  Health Aide Training                                                                    
and  Supervision grants.  There  had  been approximately  $1                                                                    
million  remaining in  the program;  the cut  was to  the $1                                                                    
million. He spoke to the last budget decrement:                                                                                 
     Health Care Medicaid Services:                                                                                             
     Removed  $52.5 Federal  Receipts  and  $52.5 G/F  Match                                                                    
     used  to fund  the  Alaska  Prescription Drug  Database                                                                    
     that  is   housed  in   the  Department   of  Commerce,                                                                    
     Community  and   Economic  Development's   Division  of                                                                    
    Corporations, Business and Professional Licensing.                                                                          
Representative Guttenberg asked  about the prescription drug                                                                    
monitoring  database. He  wondered why  it had  been deleted                                                                    
and if it had been moved to another department.                                                                                 
Vice-Chair Neuman  replied that he had  recommended that the                                                                    
database be moved based on  evaluations that were put forth.                                                                    
The subcommittee had  heard from Dr. Ward  Hurlburt with the                                                                    
Alaska Health Care Commission who  had relayed that the data                                                                    
was not live. He stated that  the data was two to four weeks                                                                    
out; the original  goal was to reduce  opiate use throughout                                                                    
the  public  and  to  prevent  individuals  from  "shopping"                                                                    
doctors.  He  stated  that  because  the  database  did  not                                                                    
reflect  live-time the  goal was  not met.  The subcommittee                                                                    
had  found that  enforcement had  fallen to  pharmacists and                                                                    
pharmacy  technicians.  He  pointed  to  a  lack  of  safety                                                                    
related  to   expired  drugs.  He   relayed  that   the  RSA                                                                    
[Reimbursable  Services   Agreement]  was  managed   by  the                                                                    
pharmacy board under DCCED.                                                                                                     
Representative  Guttenberg asked  for verification  that the                                                                    
database would  not be managed given  the recommended budget                                                                    
cut. Vice-Chair Neuman agreed.                                                                                                  
Co-Chair Austerman  WITHDREW his  OBJECTION to  the adoption                                                                    
of the  CS Work  Drafts. There  being NO  further OBJECTION,                                                                    
Work  Draft  28-GH2671\P  for  HB 266  and  Work  Draft  28-                                                                    
GH2673\C for HB 267 were ADOPTED.                                                                                               
Co-Chair Austerman  discussed future meetings.  He requested                                                                    
that  members  provide  any amendments  to  his  office.  He                                                                    
recognized that LFD was a  large part of the budget process.                                                                    
Additionally,  he  thanked  the  Office  of  Management  and                                                                    
Budget for its work.                                                                                                            
3:28:45 PM                                                                                                                    
Representative  Wilson  asked  about  the  budget  amendment                                                                    
Co-Chair Austerman  replied that the deadline  was 5:00 p.m.                                                                    
on Wednesday.  He discussed the  schedule for  the following                                                                    
HB  266  was  HEARD  and   HELD  in  committee  for  further                                                                    
HB  267  was  HEARD  and   HELD  in  committee  for  further                                                                    
3:29:52 PM                                                                                                                    
The meeting was adjourned at 3:29 p.m.                                                                                          

Document Name Date/Time Subjects
HB 267 CS WORKDRAFT FIN MH C version.pdf HFIN 3/3/2014 1:30:00 PM
HB 267
HB 266 CS WORKDRAFT FIN OP P version.pdf HFIN 3/3/2014 1:30:00 PM
HB 266
HB 266 UGF COMPARISONS&SUMMARY.pdf HFIN 3/3/2014 1:30:00 PM
HB 266
HB 266 Operating Summary UGF&DGF Fomula&Non-Formula.pdf HFIN 3/3/2014 1:30:00 PM
HB 266
HB 266 Operating Summary FORMULA & NON-FORMULA.pdf HFIN 3/3/2014 1:30:00 PM
HB 266
HB 266 Operating Summary ALL FUNDS.pdf HFIN 3/3/2014 1:30:00 PM
HB 266