Legislature(1999 - 2000)
04/03/2000 02:00 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
April 3, 2000
2:00 P.M.
TAPE HFC 00 - 98, Side 1
TAPE HFC 00 - 98, Side 2
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 2:00 p.m.
PRESENT
Co-Chair Mulder
Co-Chair Therriault Representative Foster
Vice Chair Bunde Representative Grussendorf
Representative Austerman
Representative J. Davies Representative Phillips
Representative G. Davis Representative Williams
Representative Moses was absent from the meeting.
ALSO PRESENT
Senator Sean Parnell;
TESTIFIED VIA TELECONFERENCE
Jeff Bush, Deputy Commissioner, Department of Community and
Economic Development; Julie Decker, SEARDFA, Wrangell; Geron
Bruce, Legislative Liaison, Department of Fish and Game;
Vince Usera, Senior Securities Administrator, Division of
Banking, Securities, and Corporations, Department of
Community and Economic Development; Byrce Edgmon, CDQ
Manager, Department of Community and Economic Development;
Jack Fargnoli, Senior Analyst, Office of Management and
Budget, Office of the Governor; Wendy Redman, Vice
President, Statewide Programs, University of Alaska.
SUMMARY
HB 333 "An Act relating to the accounting for and
appropriations of the dive fishery management
assessment; and providing for an effective date."
HB 333 was heard and incorporated into HB 334.
HB 334 "An Act relating to the establishment of and
accounting for an administrative cost charge for
the state's role in the community development
quota program and to the appropriation of receipts
from the charge; and providing for an effective
date."
CSSB 281(FIN) am
"An Act relating to missions and measures to be
applied to certain expenditures by the executive
branch of state government and the University of
Alaska from the state operating budget for the
fiscal year ending June 30, 2001; and providing
for an effective date."
CSSB 281 (FIN)am was heard and HELD in a
subcommittee consisting of: chair Phillips and
members Bunde, and Davies.
CS FOR SENATE BILL NO. 281(FIN) am
"An Act relating to missions and measures to be applied
to certain expenditures by the executive branch of
state government and the University of Alaska from the
state operating budget for the fiscal year ending June
30, 2001; and providing for an effective date."
SENATOR SEAN PARNELL testified in support of the
legislation. He noted that House Finance Committee staff and
agency personnel worked with the Senate on the legislation.
He stressed the importance of the legislation and noted that
the legislature appropriates funding to state agencies and
expects them to follow through on expenditures in a way that
is never clearly defined. Missions and Measures were
developed for each agency. He gave examples of the missions
and measures:
Alaska Vocational Technical Center.
(a) The mission of the Alaska Vocational Technical
Center is to provide market-driven vocational and
technical training to state residents.
(b) The legislature intends to measure the success of
the center in achieving its mission by considering;
(1) The percentage of graduates who are employed
in their areas of training;
(2) The wage increase for graduates;
(3) The percentage of students who complete long-
term training programs;
(4) The percentage of students living in student
housing compared to student- housing capacity; and
(5) For each long-term program, the number of
students enrolled in the program compared to the
number applying to the program.
Division of Juvenile Justice.
(a) The mission of the Juvenile Justice is to protect
and restore communities and victims while holding
juvenile offenders accountable for correcting their
behavior.
(b) The legislature intends to measure the success of
the division in achieving its mission by considering:
(1) The percentage of juvenile offenders that re-
offend;
(2) The percentage of juvenile offenders in long-
term treatment who improve their grade point
average during their time at the facility;
(3) The percentage of juvenile offender court-
ordered restitution and community service that is
paid or performed; and
(4) The number of escapes from juvenile justice
institutions.
Senator Parnell stressed that the bill will only be as
effective as the follow-up and accountability that the
legislature gives it in upcoming years. He stressed that the
legislature needs to work with agencies to determine if they
have met their mission and if not, why not. The legislature
can then respond to issues of management or inadequate
funding. The mission and measure bill is separate from the
actual budget bill. He spoke in support of combining
missions and measures, and the actual budget into one piece
of legislation. He noted that the state of Texas combines
its missions and measures and appropriations into one
document. The public can locate the mission and outcomes
with each appropriation item. He encouraged Alaska to take
the next step to integrate missions and measures into one
booklet with the operating and capital budgets.
Senator Parnell suggested deletion of the Senate language
for the Division of Banking, Securities, and Corporations on
page 7, line 28: "protect shareholders in corporations". He
pointed out that it is a broad and big statement and that
there is no statutory direction to protect shareholders in
corporations in such a broad-brush way. This language was
added on the floor of the Senate.
Representative J. Davies questioned if the purpose of the
measures is to actually measure outcomes, not to measure
what is produced. Senator Parnell agreed and gave examples
of the intention. In the Department of Public Safety the
intent is to measure how safe the roads are. In the
Department of Transportation and Public Facilities the
intent is to measure if the roads are adequately maintained
to citizen standards. The intent is not to measure the
number of lane-miles that are maintained; the measure is how
well they are maintained. He stressed that as a result, the
public would have a more readable and understandable budget.
Representative Phillips questioned if there was much
difference between the House and Senate language. Senator
Parnell explained that the work was divided between the
House and Senate. The House language was incorporated along
with the Senate language into a bill. There were amendments
in the Senate Finance Committee and on the Senate floor. He
stated that the only significant change was to the mission
and measures of the University of Alaska.
VINCE USERA, SENIOR SECURITIES ADMINISTRATOR, DIVISION OF
BANKING, SECURITIES, AND CORPORATIONS, DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT provided information on
the legislation. He stressed that the measure for Division
of Banking, Securities, and Corporations on page 7, line 28
(see above) is so broad as to be impossible to comply with
and that it would cover any person that owns a share in any
corporation.
Representative Phillips agreed with comments by Mr. Usera.
She stated that an audit by the Legislative Budget and Audit
Committee found that the legislature had no statues in place
to implement the measure.
JACK FARGNOLI, SENIOR ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR testified in support of the
legislation. He stressed that the governor would look
forward to a more comprehensive process for more public
involvement. He spoke in support of greater public
participation. He emphasized that as the measures become the
focus of a more comprehensive discussion that the role of
the commissioners and the governor's cabinet would be
interpreted more broadly in terms of the statutory
responsibility of the departments. He added that use of a
standardized approach for administrative services of
functions is problematic and emphasized that the departments
are inherently different and that future discussion
regarding the differences would be fruitful.
Representative Phillips MOVED to delete language on page 7,
line 8, subsection (3): protect shareholders in
corporations. There being NO OBJECTION, it was so ordered.
Representative J. Davies MOVED to ADOPT the House language
for the university and to delete the Senate version. He
maintained that the Senate language was "weak tea".
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY
OF ALASKA provided information on the amendment to the
legislation. She acknowledged that the House worked
extensively with the Board of Regents on the university's
missions and measures, but noted that the Senate language
picked up the key measures. There isn't any inconsistency
between the House and Senate language. The primary
difference is that the Senate did not include all of the
language adopted by the House. She stated that the primary
issues were addressed and that the university would support
either version.
(Tape failure occurred at this point.)
Senator Parnell noted that Senate changes were the result of
discussions that concluded that many of the measures were
not true measures. He gave the following examples:
The new or expanded degree programs in teacher
education, health careers, process technology,
transportation and logistics, information technology,
seafood processing, and other high demand job areas;
The increase in research grants in arctic biology,
climate change, resource development, fisheries and
ocean science, logistics, geosciences, and atmospheric
sciences;
Senator Parnell emphasized that the intent was to not focus
on the income or new programs but on the outcomes.
Ms. Redman observed that the House Subcommittee wished to
direct were the university would spend their efforts in
relationship to research. The intent was to increase
research in some areas such as arctic research.
Representative J. Davies agreed and explained that a problem
with research is that the most important research does not
payoff for a long period of time. Therefore, it is difficult
to measure the outcome. He acknowledged the need to measure
results, but emphasized the difficulty of measuring a
research enterprise with results based orientation. He
observed that the House included a measure of "the number of
annual citations and references per research faculty
member." He maintained that research, cooperative extension
and public service is left out of the Senate version. He
observed that much of the language in the House version was
derived from language recommended by the Board of Regents
and refined by the House Subcommittee with their help. He
felt that the Senate language was vague.
Senator Parnell observed that the measure of the number of
University of Alaska graduates, by community of origin and
by community of current employment, who are new teachers,
new principals, and new superintendents does not measure the
quality of the teachers.
Co-Chair Mulder expressed appreciation for the brevity of
the Senate version. He suggested that the proper balance
could be derived from combining the Senate and House
language. He felt that House items 8 - 10 were worth
considering.
Representative J. Davies stated that it is appropriate to
have a mix of measures with productivity to measure the
quality of the program in meeting a state need. He stressed
the need to produce teachers that can be employed in rural
Alaska.
Representative Phillips agreed that an ideal statement could
be derived from a combination of the House and Senate
language. She felt that the Senate version was incomplete
and emphasized the need for measures regarding vocational
education. Representative J. Davies noted that a typical
mission of a university doesn't include a community college.
Alaska is unique and it is important to roll in the
vocational mission to highlight the uniqueness of Alaska's
system.
Co-Chair Therriault referred CSSB 281 (FIN)am to a
subcommittee consisting of: chair Phillips and members
Bunde, and Davies.
Senator Parnell pointed out that the Senate version included
measures relating to research:
(8) the number and amount of research grants in
Alaska-specific areas of inquiry;
(8) the occurrences of applied research benefiting
Alaska's economy;
(8) the average number of hours faculty members spend
on classroom instruction, student advising,
research, and other activities.
Representative J. Davies stressed that they are not in the
mission statement.
CSSB 281 (FIN)am was heard and HELD in a subcommittee
consisting of: chair Phillips and members Bunde, and Davies.
HOUSE BILL NO. 333
"An Act relating to the accounting for and
appropriations of the dive fishery management
assessment; and providing for an effective date."
HOUSE BILL NO. 334
"An Act relating to the establishment of and accounting
for an administrative cost charge for the state's role
in the community development quota program and to the
appropriation of receipts from the charge; and
providing for an effective date."
Co-Chair Therriault noted that HB 334 and HB 333 were
combined into one proposed committee substitute, work draft
1-GH2069\H Utermohle, 4/3/00.
BYRCE EDGMON, CDQ MANAGER, DEPARTMENT OF COMMUNITY AND
ECONOMIC DEVELOPMENT provided information on the
legislation. The legislation would switch the funding source
for the CDQ program from general funds to statutory
designated program receipts. The fee would allow the program
to be self-supporting.
(The tape resumed at this point.)
Mr. Edgmon observed that there is a $400 thousand dollar
ceiling (on the amount that can be reappropriated for
administrative costs) in the legislation. The cost of
oversight is currently approximately $250 thousand dollars.
He noted that the state does not anticipate that a level of
$400 thousand dollars would be reached but observed that
legislation would be required to remove the ceiling. The fee
would be administered by the Department of Community and
Economic Development. He observed that the House Labor and
Commerce Committee amended the legislation to allow new CDQ
groups to be exempted from the fee for the first two years
of their existence.
Representative Austerman questioned the intent behind the
exemption of new CDQ's from the fee. Mr. Edgmon reiterated
that the provision was added by the Senate Labor and
Commerce Committee and stated that the state is neutral on
the issue. He observed that existing CDQ groups have
expressed concern with the provision.
Representative Austerman asked for information on the
program. Mr. Edgmon explained that the CDQ staff is charged
with working with CDQ groups to assure that they meet the
mission of the program to create sustainable fisheries
related economies in Western Alaska. He noted that CDQ
groups have community development plans on file with the
state of Alaska. Staff works with groups to assure that they
comply with state and federal program standards. Staff also
allocates quota for the groups. Groups are growing and
making more investments on the Bering Sea. The CDQ staff
reviews: plans for due diligence on new investments,
performance measures and compliance with program standards.
In response to a question by Co-Chair Therriault, Mr. Bryce
stated that the department was not concerned over the
merging of HB 333 and HB 334.
Representative Phillips noted that there is a difference in
fiscal notes. Co-Chair Therriault observed that new notes
would be requested.
GERON BRUCE, LEGISLATIVE LIAISON, DEPARTMENT OF FISH AND
GAME stated that it would be appropriate to roll HB 333 and
HB 334 into one bill. He noted that both bills deal with the
classification of program receipts. He stressed that HB 333
only deals with classification of program receipts; HB 333
does not establish a fee structure. He explained the issue
arose from legislation passed in 1997. A group of commercial
fishermen that wanted to start a new fisheries worked with
Representative Williams on legislation, which allowed them
to form an association and conduct an election to place an
assessment on people harvesting the dive fishery resource in
the area represented by the association. The assessment of
the Southeast Regional Dive Fishers Association went into
effect and the revenue has been flowing into the treasury.
The department has requested appropriation of the funds in
FY01. At the current time they are classified as general
funds. The legislation would classify the funds as statutory
designated program receipts. He emphasized that it is a case
of an industry group that wants additional services from
government and is willing to pay for them. The department
and the industry group would jointly develop a plan.
In response to comments by Co-Chair Mulder regarding the
Department of Fish and Game's fiscal note, Mr. Bruce
explained that the revenue is going to be available in FY01.
It is not yet an on-going program. He explained that there
are expenditures funded through the class of revenue. The
funds are being reclassified. They are requested in the
2001-operating budget and are currently in the language
section.
Representative J. Davies clarified that the funds would be
statutory designated program receipts.
Co-Chair Therriault stressed that the conference committee
can resolve issues relating to the location of the funding.
He emphasized that he did not want to double fund the
request.
Co-Chair Mulder asked if the department would have the
authority to assess against CDQ participants for the
administrative cost without the bill. Mr. Edgmon stated that
they would not have the authority without the bill. Co-Chair
Mulder noted that section 4 provides the statutory
authority.
Representative Austerman asked how the fees are determined.
Mr. Edgmon explained that there is a two-tiered approach.
The current cost is $250 thousand dollars. The state of
Alaska developed a fee with the CDQ groups. Half of the $250
thousand dollars is paid with a flat fee that applies to all
six groups. The remaining 50 percent is portioned out to the
groups based on their allocation of the quota.
Representative Austerman questioned if the CDQ groups must
approve the flat fee before it can be raised. Mr. Edgmon
responded that the CDQ staff has an understanding that they
would work with the groups and honor any changes. The state
does not anticipate any changes to the current management
structure or the fee. The fee could be changed at anytime up
to the $400 thousand dollar limit.
Co-Chair Mulder asked what is expended to manage the
program. Mr. Edgmon stated that the cost is $251 thousand
dollars. The program costs have remained stable for 6 or 7
years. Representative Austerman expressed concern with the
provision, which would allow statutory designated program
receipts to grow from $250 thousand dollars to $400 thousand
dollars.
Co-Chair Mulder stressed that the state maintains the
oversight and can place a limit on the amount of money that
can be received. Representative Austerman questioned, if
there is going to be oversight, why there should be a $400
thousand dollar cap. Co-Chair Mulder agreed and suggested
that the limit was included to provide comfort to the
groups.
Representative J. Davies expressed concern that the state
would be forced to amend the statute if the limit was
retained. He referred to section (f), page 3, line 23 and
questioned why a two year exemption was chosen.
Mr. Edgmon noted that the language was added in the Senate
Labor and Commerce Committee. He did not know the intent. He
noted that Senator Stevens does not support expansion of new
CDQ groups. The amendment would allow any new CDQ group, in
theory, to be exempted from the fee for two years. The
current fee is approximately $250 thousand dollars divided
by six.
Representative G. Davis questioned if there was discussion
regarding expansion. Mr. Edgmon stated that expansion is an
on-going issue. He added that the $400 thousand dollar
ceiling was agreed on by the CDQ groups, in the event that
extra staff were needed to keep pace with the groups'
growth. He stated that he did not anticipate a fee increase.
Mr. Bruce referred to the fiscal note that was submitted by
the Department of Fish and Game for HB 333. He clarified
that both the legislative classification of funds and the
appropriation are needed. He added that the fiscal note was
prepared before the funds were included in the language
section of the operating budget.
Co-Chair Mulder MOVED to ADOPT the proposed committee
substitute work draft 1-GH2069\H Utermohle, 4/3/00. There
being NO OBJECTION, it was so ordered.
Co-Chair Mulder MOVED to delete lines 5 and 6 on page 3:
"and cannot exceed $400,000". He stressed that the language
is unnecessary
(Tape Change, HFC 00 - 00, Side 2)
There being NO OBJECTION, it was so ordered.
Representative J. Davies MOVED to ADOPT Amendment 2: delete
"two" on page 3, line 26 and insert "one". Co-Chair
Therriault OBJECTED for the purpose of discussion.
In response to a question by Co-Chair Therriault, Mr. Edgmon
stated that he did not have an objection to the amendment.
Representative Phillips spoke in support of retaining the
two-year period. She pointed out that it takes a lot of
money and effort for startup.
Representative Austerman spoke in support of the amendment.
He pointed out that the program gives away the resource and
stated that he would strike the whole section.
Representative G. Davis noted that existing CDQs would be
paying for new programs.
Co-Chair Mulder felt that it would be unfair to charge one
group for the administrative cost of another group for more
than one year.
Representative J. Davies observed that the state paid for
the previous program startup.
Representative Austerman MOVED to amend the amendment by
deleting subsection (f). Co-Chair Mulder OBJECTED. He argued
that new groups should probably be allowed time to find out
if they can "sink or swim."
Representative Grussendorf questioned if a new CDQ community
could form without subsection (f).
Co-Chair Therriault stressed that the language is
permissive, but does not authorize new CDQ's. Representative
J. Davies agreed and thought that it was up to the federal
government to authorize new CDQ communities.
Representative Austerman stressed that the dive fisheries
are being told to pay before they go fishing, while new
CDQ's would be given a resource and not charged for its
management.
Co-Chair Mulder withdrew his objection to the amendment to
Amendment 2. There being NO OBJECTION, Amendment 2 was
amended.
There being NO OBJECTION, Amendment 2 was adopted.
Co-Chair Mulder MOVED to report CSHB 334 (FIN) out of
Committee with the accompanying fiscal notes. There being NO
OBJECTION, it was so ordered.
ADJOURNMENT
The meeting was adjourned at 3:25 p.m.
House Finance Committee 11 4/3/00
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