Legislature(1999 - 2000)
03/05/1999 01:40 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 5, 1999
1:40 P.M.
TAPE HFC 99 - 37, Side 1.
TAPE HFC 99 - 37, Side 2.
CALL TO ORDER
Co-Chair Mulder called the House Finance Committee meeting
to order at 1:40 P.M.
PRESENT
Co-Chair Mulder Representative G. Davis
Co-Chair Therriault Representative Grussendorf
Vice-Chair Bunde Representative Foster
Representative Austerman Representative Kohring
Representative J. Davies Representative Williams
Representative Moses absent from the meeting.
ALSO PRESENT
Nancy Slagle, Director, Division of Administrative Services,
Department of Transportation; Dan Spencer, Chief Budget
Analyst, Office of Management and Budget, Office of the
Governor;
TESTIFIED VIA TELECONFERENCE
Andree Mcleod, Anchorage.
SUMMARY
HB 100 "An Act making and amending capital, supplemental,
and other appropriations, and appropriations to
capitalize funds; ratifying certain expenditures;
and providing for an effective date."
HB 100 was HELD in Committee for further
consideration.
HOUSE BILL NO. 100
"An Act making and amending capital, supplemental, and
other appropriations, and appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
ANDREE MCLEOD, ANCHORAGE testified via teleconference. She
maintained that the Department of Health and Social Services
has an accounting problem. She referred to a letter dated
11/12/98 from Dana Owens, Office of Management and Budget to
Senator Phillips (copy on file). She maintained that the
Office of Management and Budget could only account for $380
thousand dollars of the $8,051,775 million dollars they
received from the Center of Disease Control and Prevention
(CDC) for 22 grants to the state of Alaska.
Co-Chair Mulder stressed that the House Finance Committee
tries to identify needs and how efficient money is being
spent.
Ms. McLeod suggested that she address the House Finance
Subcommittee for the Department of Health and Social
Services.
Co-Chair Therriault encouraged Ms. McLeod to submit her
recommendations to his office so that he could review them.
He indicated that he would be willing to discuss her
recommendations at a later date.
Co-Chair Mulder discussed efforts with the Office of
Management and Budget to reduce and prioritize expenditures.
The Office of Management and Budget identified $6.4 million
dollars that could be saved by "belt tightening". These
savings are included in the supplemental request. The
Committee is reviewing the supplemental request to determine
which requests are absolutely necessary.
Co-Chair Therriault pointed out that the letter from Mr.
Owen was sent to Senator Randy Phillips. He questioned if
Senator Phillips had had time to review the letter. He noted
that there are grant agreements between the CDC and the
state Department of Health and Social Services. There is a
scope of work that must be done under each grant.
Representative J. Davies questioned how Ms. McLeod reached
the conclusion that the money is not accounted for. Ms.
McLeod responded that the letter from Mr. Owen states that:
"Two grants, numbers 13 and 21... are noted only as being
received by the state of Alaska. The Department of Health
and Social Services administers both grants." She concluded
that the state only received funding for these two grants.
Representative J. Davies pointed out that there might be a
lagtime between when the grant is awarded and the money
transferred to the state.
Co-Chair Mulder observed that there is some discrepancy
between state and federal fiscal years, which could account
for the discrepancy in accounting.
Co-Chair Therriault noted that most of the grants were to
two different divisions. In order for the Department of
Health and Social Services to receive and expend the funding
they must receive authority from the legislature.
Ms. McLeod observed that funding is scarce and that
everything needs to be looked at.
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
Co-Chair Mulder asked for more information on reductions to
Northern District roads.
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION clarified that the majority of
general fund dollars provided to the Department of
Transportation and Public Facilities are in maintenance and
operation of the highways and airports and the Alaska Marine
Highway System. There are set amounts in the department's
maintenance and operations budget that must be expended
every year. Supplies are ordered months in advance. The
department's utility costs are fixed. Most of the
department's non-personal service costs are non-
discretionary fixed costs. The department's ability to make
cuts in the end of the fiscal year is limited due to these
fixed costs. She noted that the department has flexibility
in its spring schedule of road openings.
Co-Chair Therriault acknowledged that fixed costs reduce the
department's ability to make reductions. He questioned if
the Governor was aware of which roads would have their
opening deferred to later in the year. Ms. Slagle did not
know if the Governor knew the identity of the roads that
were scheduled for delayed openings. Co-Chair Therriault
asked if the Department of Transportation and Public
Facilities utilized a list to prioritize the roads and
identify savings from particular roads. Ms. Slagle stated
that a list was not created, but that they could provide
one. She explained that the department would provide
information regarding the number of people utilizing a road
or the type of industry that uses a road.
Co-Chair Therriault asked if the Department of
Transportation and Public Facilities evaluated savings and
prioritized the roads. He emphasized that discussion should
occur regarding which roads can be delayed.
Representative Bunde complimented the Department of
Transportation and Public Facilities for their efforts to
reduced spending with minimal impact. He observed that some
residents prefer not to pay taxes and not to have service
provided. He questioned if money should be added back to
maintain services.
Co-Chair Mulder noted that three of the roads are in the
Nome area, which does pay for services.
Representative Austerman observed that there are state roads
in the Kodiak area that are not plowed in the winter.
Co-Chair Mulder noted that the roads in question are
normally opened on May 1st. The department proposes to allow
the roads to be open when the snow melts.
Representative J. Davies questioned what cost is being
deferred.
Representative Foster observed that plugged culverts can
lead to road erosion and may cost more then the cost of
opening up the drainage.
Co-Chair Mulder asked if the reductions in service are
accepted would they be annualized. Ms. Slagle did not know
if the reductions would be annualized. Representative
Foster suggested that if the reductions are annualized that
different areas be selected.
DAN SPENCER, CHIEF BUDGET ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR clarified that there has not
been a decision in regards to annualizing the reduction. He
pointed out that the reductions were selected in part
because of the lateness in the fiscal year. He observed that
if there had been time to plan for the reductions, the
department might have made other choices.
Co-Chair Mulder recalled that there were $15 million dollars
of unspecified reductions in the Governor's proposed FY00
budget. He asked if the reductions in the supplemental would
be annualized toward the $15 million dollar savings.
Mr. Spencer responded that the Administration anticipated
working with the Legislature to identify $15 million dollars
worth of reductions. He acknowledged that annualizing the
reductions identified in the supplemental is an option but
emphasized that there are several policy questions. The
Administration has not decided to proceed in that manner.
Co-Chair Mulder asked for additional information regarding
the utility and usage of the roads in question.
Representative Foster observed that there would also be
reductions to the Alaska Marine Highway System. Ms. Slagle
agreed that ferry service would be reduced. She discussed
plans to reduce service in order to realize savings. The
Columbia would be left in lay-up a couple of weeks longer.
Representative Foster questioned if expenditures for
supplies were at the expense of the Northern District and
Alaska Marine Highway System. Ms. Slagle noted that the
majority of the budget is committed in the first part of the
year for fixed costs. Representative Foster observed that
service for May and June is being reduced to pay for the
fixed costs.
In response to a question by Representative Foster, Ms.
Slagle noted that chemicals are used throughout the state.
Co-Chair Mulder noted that the department has indicated that
the use of calcium chloride and other chemicals would be
reduced due to the austerity program.
Representative Foster questioned if the FY99 budget was
short-funded. Ms. Slagle noted that the reduction is part of
the overall belt tightening that is being requested to
reduce the FY99 budget.
Co-Chair Mulder noted that the Governor asked for a $1
million dollar reduction from the Department of
Transportation and Public Facilities after the FY99 budget
was approved.
Representative Bunde observed that similar discussions will
be necessary to understand the impact of budget reductions.
Mr. Spencer emphasized that there is not such thing as a cut
or asperity program without impacts. He emphasized that the
attempt is being made to make impacts those that can best be
lived with in the short-term and will not worsen the
situation.
Representative Austerman stressed the need to set
priorities.
Representative Foster observed that ISTEA funding, over the
last 11 years, has resulted in over $2 billion dollars of
new road construction that the state now maintains.
Co-Chair Mulder referred to disaster funds. He noted that $1
million dollars is coming from the federal government for
road washouts.
Ms. Slagle explained that the Department of Transportation
and Public Facilities has submitted a request to the federal
Highway Administration for $1,513,800 million dollars as
part of the Southeast disaster. This would pay for repair of
roads in the Juneau and Haines area. The federal Highway
Administration will not pay for $141 thousand dollars of the
request. They approved the remaining funds. The payment has
been delayed due to a shortage of funds in the Emergency
Response Fund. The state cannot receive the federal funds
until there is a congressional appropriation to the
Emergency Response Fund.
DEPARTMENT OF NATURAL RESOURCES
Co-Chair Mulder referred to the request for Perseverance
Trail repairs.
(Tape Change, HFC 99 - 37, Side 2)
Representative Grussendorf pointed out that the state is
liable until the city and borough of Juneau accepts the
Perseverance Trail.
Co-Chair Mulder noted that the legislature approved funding
for trail repairs in FY99 that was subject to the city
taking title to the trail. The Governor deleted this
conditional language. Mr. Spencer explained that the court
subsequently struck down the conditional language.
Representative Foster noted that there are reductions in the
Northern Region and the Alaska Marine Highway System. He
questioned if the million-dollar reduction in the Department
of Transportation and Public Facilities is being spread
across the state. Ms. Slagle noted that reductions are also
occurring in the Central Region. She noted that positions
are being held vacant and supplies are being reduced.
Representative Foster asked if airports would be impacted.
Ms. Slagle noted that the international airports are not
impacted. The only impact to rural areas would be if
vacancies in the Central area were not filled. She observed
that there are safety issues that must be met.
Representative Foster questioned if deferred maintenance and
painting would be impacted by the reduction. Ms. Slagle did
not know if that area would be impacted.
HB 100 was HELD in Committee for further consideration.
RECESSED
The meeting was recessed at 2:40 p.m.
HFC 6 3/05/99
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