Legislature(2009 - 2010)HOUSE FINANCE 519
03/01/2010 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB300 || HB302 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 300 | TELECONFERENCED | |
| += | HB 302 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 1, 2010
1:38 p.m.
1:38:07 PM
CALL TO ORDER
Co-Chair Hawker called the House Finance Committee meeting
to order at 1:38 p.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Vice-Chair
Representative Allan Austerman
Representative Mike Doogan
Representative Anna Fairclough
Representative Neal Foster
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
None
SUMMARY
HB 300 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 300 was HEARD and HELD in Committee for
further consideration.
HB 302 APPROP: MENTAL HEALTH BUDGET
HB 300 was HEARD and HELD in Committee for
further consideration.
HOUSE BILL NO. 300
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, and to capitalize funds; making supplemental
appropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska; and
providing for an effective date."
HOUSE BILL NO. 302
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:39:08 PM
Co-Chair Hawker explained that the committee substitutes
for HB 300 and HB 302 represented the work completed by the
House Finance Committee subcommittees and stated his intent
to have a high-level discussion of the changes.
Vice-Chair Thomas MOVED to ADOPT CS for HB 300(FIN) (26-
GH2823\M, Bailey, 3/1/10) as a working document before the
committee. There being NO OBJECTION, it was so ordered.
Vice-Chair Thomas MOVED to ADOPT CS HB 302(FIN), (26-
GH2825\P, Bailey, 2/27/10) as a working document before the
committee. There being NO OBJECTION, it was so ordered.
1:42:10 PM
Co-Chair Hawker described the Mental Health Trust bill (HB
302) as a derivative of the transactions in HB 300 and did
not expect further discussion.
Co-Chair Hawker noted that the governor's office had
introduced operating budgets involving "austere" agency
operations, including a modest 5.6 percent increase in
general funds for agency operation spending and a 13
percent increase in state-wide spending. He added that
approximately 43 percent of the agency operations bill
represented formula changes, largely increases related to
Medicaid programs, the Department of Health and Social
Services, the education funding formula, and implementing
statutory cost differentials.
Co-Chair Hawker continued that that the other major
components in HB 300 included increases for replacing one-
time items such as the fuel requester based on the price of
petroleum products, accounting for approximately 26 percent
of the growth. He explained that $68 million (30 percent of
the governor's request) were in discretionary categories.
1:45:35 PM
Co-Chair Hawker informed the committee that a summary of
the work of the subcommittees to date was found in the
handout, "Agency Summary, House Structure" (copy on file).
The upper left-hand corner indicates fund groups, general
funds (a numbers and language aggregate). The first column
includes the governor's amendments and the right-hand
column (column four) has the House Finance CS
recommendations. He added that the right-hand column gave
the appearance of reducing the governor's budget by $43
million; he warned that the numbers could be misleading.
The subcommittees had removed from the budget and set aside
the governor's requests for additional oil and gas
increments. He noted that the oil and gas increments would
be considered in committee as a separate issue.
Co-Chair Hawker continued that the second report (a single
page distributed by his office) details the oil and gas
requests (particularly the gasline request) that have been
removed from the budget pending further committee hearing
and determinations. The incremental requests are broken
into two significant categories; the top half are those
that occurred in the original budget in the language
section, and the bottom half are additional items removed
by the subcommittee on the Department of Law for the
numbers section requests. He reminded listeners that the
process was procedural; the issues are still being
considered and no final judgment has been made.
1:48:45 PM
Co-Chair Hawker pointed out that the detail behind the
reductions proposed in the CS is encompassed in the budget
subcommittee closeouts, which are available online. He
acknowledged the work done to establish consistent
formatting of the subcommittee work.
Co-Chair Hawker addressed column two. The committee has
tried to bring expenditures "back on budget"; earlier in
the process, zero-change CSs had been adopted that
converted the governor's initial budget document to the new
roll-up format. The subcommittees worked through the
detailed budget requests and Legislative Finance aides had
a chance to study each agency at a transaction level; the
last round of fund-source changes were identified. He
called the process "properly classifying by consistent
definition" of items that had been categorized in the past
as general fund program receipts, statutorily designated
program receipts, and receipt-supported services. The
detail about the fund-source shift transactions found in
the column is available on the Legislative Finance website.
He commented that "receipt-supported services" is a
category used for programs intended to be self-sustaining
and operate entirely on self-generated funds.
1:52:52 PM
Co-Chair Hawker provided the example of the Regulatory
Commission of Alaska, which exists solely within its
authority to generate its own revenues separate from
general fund program receipts. An agency bills for services
not intended to be the sole funding source for the
operation (such as in the Department of Motor Vehicles).
Both categories (self-sustaining programs and program
collections) are still in the category of designated
general funds, which are designated for specific purposes,
as opposed to the fund source that remains in other funds,
or "off budget." Statutorily designated program receipts
reflect contractual arrangements that the state may have.
The legislature does not have discretionary authority over
how the funds are used. He gave the example of a bequest to
the state that is limited to certain uses and specific
service contracts.
Co-Chair Hawker summarized that the purpose of column two
was to clarify the distinctions across the budget. He noted
a net change of $479,000 of monetary consequence on the
budget; the remaining transactions are zero net. In the
past, funds being appropriated out of the Alaska Industrial
Development Authority were used for other unrelated
purposes, which was contrary to legislative intent.
Co-Chair Hawker turned to agency summary reports with
language and numbers. The last detailed summary report
addresses financial changes that occurred in the language
section, especially the changes removing oil and gas
appropriations. There is about a $297,000 differential
between the total amount removed and the amount of the oil
and gas transactions; the amount relates to FY 09 stimulus
money left in the governor's budget in the Department of
Revenue for Child Support Enforcement Services that was
moved into the language section from the numbers section.
1:58:12 PM
Co-Chair Hawker directed attention to page 59, Section 4 of
the HB 300 CS. He explained the findings section as saying
that the stimulus money had been used the year before to
help the state.
Co-Chair Hawker turned to Section 5, "Ratification of Small
Amounts in the State Accounting System." He stated that he
was proposing the idea for the committee's consideration.
The concept was developed with Legislative Finance and the
Office of Management and Budget (OMB) regarding
ratifications in supplemental budgets. He thought
ratifications of significant amounts should be scrutinized,
but since each ratification costs a lot to implement, he
did not think very small ones were necessary. The proposed
mechanism would allow agencies to absorb ratification items
of less than $500 into the on-going agency budget, and a
list of the items absorbed would be provided to the
legislature. He believed the proposal would increase
efficiency and lower costs as well as frustration.
2:01:23 PM
Co-Chair Stoltze asked the reason for the cut-off number
of $500. Co-Chair Hawker responded that the number was a
judgment call. He did not see anything under $500 that
raised questions.
Co-Chair Stoltze asked whether unclaimed property or
uncashed checks would show up in the ratifications numbers.
Co-Chair Hawker replied that the unclaimed property
division would continue to operate independently. Co-Chair
Stoltze asked about uncashed checks. Co-Chair Hawker
believed they would show up in another section of the
budget.
Co-Chair Hawker remarked that the language used was similar
to that in previous budgets. He highlighted a few programs,
beginning with page 62, items (e) and (f) providing full
funding for the state's Power Cost Equalization (PCE)
program.
Co-Chair Hawker pointed to page 63, item (a) related to
management practices in the Department of Health and Social
Services. The department is subject to a penalty or fine of
$1.2 million each year for three years; the item is the
first installment. He highlighted item (b), noting that the
legislature is operating through the end of the fiscal year
on a stimulus funds enhanced Federal Medical Assistance
Percentage (FMAP). Unless additional federal law is passed
extending the increased FMAP, the budget expects that the
enhanced rate remains in effect. The language states that
the legislature will revert back to the original general
funds allocation if the FMAP does not remain in effect.
2:05:20 PM
Co-Chair Hawker emphasized that the committee does not
traditionally prepare a budget based on speculation, but he
was confident about the assumption in the item.
Co-Chair Hawker noted that page 65, Section 21 contained
language related to the "fuel trigger." Agencies have a
base level of funding in their budgets for fuel and
utilities; the agencies would receive additional money if
the price of oil reached a certain level during two
benchmark dates during the year. He stated that the fuel
trigger has worked well. The language was originally
brought into the budget in 2007. He noted that the market
is currently fairly stable.
Co-Chair Hawker flagged an upcoming amendment to the
section that would trip the fuel trigger at $50 per barrel
instead of $35 and take the base level below that into the
base budget of agencies.
Representative Gara referenced page 68, line 15, related to
the 8 percent of the fuel trigger amount going to the
University of Alaska. He pointed out that the university
had asked for $2 million in extra fuel cost reimbursement
in subcommittee; because of the fuel trigger they would get
around $1.2 million. He queried the analysis.
2:08:50 PM
Co-Chair Hawker clarified that the mechanism would give the
university approximately $4 million extra. He recalled that
previous conversation with the university had established
that the fuel trigger would work for them. He recalled that
the university had asked for a budget amendment the
previous year increasing their fuel, in addition to the
fuel trigger amounts. He noted that the Department of
Corrections needed $2 million more in base funding.
Co-Chair Stoltze questioned the fuel trigger at $35. Co-
Chair Hawker spoke to the proposed change of a $50
threshold.
2:12:36 PM
Co-Chair Hawker believed that the budget clarification
project had brought the separate fund sources back into the
rollup and review. The language accounts for the receipts
by source so that people know where the money comes from.
The money can be seen moving out of the funds. The
subcommittees are exploring the items in detail.
Co-Chair Hawker pointed out item (n) on page 71, related to
full forward funding of the FY 12 public education fund. He
underlined significant items on page 72, beginning with
line 14. The Department of Revenue estimates that the $180
million would need to be deposited into the oil and gas tax
credit fund in order to meet the tax credit claims for
exploration incentive credits. He explained that the amount
had been looked at the year prior and the amount in the oil
and gas credit fund was in excess of what was needed. The
balance was lowered by $200 million; this year $180 was
proposed to be replaced. He thought the number was
reasonable.
Co-Chair Hawker moved to line 16 (e) regarding full funding
of the state's revenue-sharing program. The item would
replace $60 million distributed for municipal revenue
sharing. Page 73 has the retirement system funding. He
emphasized that the funding amounts are statutory; the
municipalities had a maximum fixed rate and the state would
pick up the balance of the addition retirement funding
rates; Public Employees Retirement System (PERS)
contributions from communities are maintained at 22 percent
and Teachers Retirement System (TRS) contributions are at
12.56 percent. The state picks up the continually inflating
service-cost liability.
2:16:37 PM
Co-Chair Stoltze interjected that the item was another form
of revenue sharing though more substantial than actual
statutory revenue sharing.
Representative Gara asked whether the number was bigger
than last year and if it was by formula. Co-Chair Hawker
answered in the affirmative.
Co-Chair Hawker noted that there were collective bargaining
units currently working on settlements. Section 29 provides
broad authority to take care of the settlements, which
would be brought specifically into the budget as needed.
Co-Chair Hawker mentioned routine payment of debt-service
costs for the state and the various bond obligations that
are statutory. He highlighted Section 32, page 79, the
coverall provision in which the Constitution Budget Reserve
(CBR) will be fully repaid after the FY 10 supplemental
budget passes. Next year, there will be an ability to turn
to the statutory budget reserve (SBR) to meet budget
requirements.
Co-Chair Hawker relayed that Section 33 has the one CBR
provision in the bill. He emphasized that there is no
appropriation from the CBR in the bill, but there is a
section about the CBR. He detailed that since the state's
money is managed under combined management authority in the
treasury division, the division has authority to utilize
funds that belong in the CBR to meet temporary shortfalls
in state cash flow. The provision stipulates that money
used from the CBR for cash-flow needs will be paid back
with interest in order to keep the CBR whole. Interest
earned on general fund balances is appropriated into the
CBR. The middle section addresses fund compensation for
lost earnings caused by use of the fund's balance for
general fund principals; at the end there is a limiting
factor stipulating that the amount appropriated by the
section may not exceed an amount equal to the earnings lost
on the CBR. He thought the section might be more
understandable if it addressed the rule, the limit, and
then the intent.
2:21:16 PM
Representative Doogan asked why temporary loans for cash-
flow purposes did not come out of the SBR, as the money was
theoretically easier to get to. Co-Chair Hawker did not
know.
Co-Chair Stoltze called one of the funds a savings account
and the other a checking account. Co-Chair Hawker's theory
was that money has been in the CBR for 25 years, while the
SBR has only existed for two years. Co-Chair Stoltze
recalled short-lived SBRs that were not paid back. Co-Chair
Hawker noted that [David Teal from Legislative Finance] was
nodding.
Co-Chair Hawker turned to a language change on page 80,
paragraph (b). He stated that in the past when there was a
debt to the CBR, the state paid the CBR management fees out
of the CBR. Since there is a general fund surplus, the
management fees would be taken out of general funds.
Co-Chair Hawker explained that Section 34 (lapsed
extensions) would re-enact a 2007 provision scheduled to
lapse in 2010 that still has money. The item extends the
lapse date and is part of a $5 million Department of Public
Safety appropriation that has been used for domestic
violence and sexual assault programs. He commented that the
language in the item above in 18 (b) was the $600,000 from
the state to bail out the Matanuska Maid dairy.
Co-Chair Hawker turned to lines 12 through 23, the spending
authority for federal stimulus money appropriations. He
explained that the original bill passed was budgeted for FY
10; the $82 million in aggregate is the amount that is
currently estimated to not be expended by the end of 2010;
not lapsing the provision would allow the money to still be
available for FY 11.
Co-Chair Hawker remarked that item (d) on line 24 affects
the 2009 budget. The governor was given money to work
towards redistricting. He noted that little of the money
has been spent and the money was extended; another $1
million was added in the governor's budget as well.
2:26:26 PM
Co-Chair Hawker reported that the budget would take effect
July 1, 2010 except for lapsed extensions.
Representative Austerman pointed to page 80 regarding the
management fees being paid out of the general fund and
asked why the item was for only one year. Co-Chair Hawker
replied that every appropriation is for one year. Another
option would be moving items into the agency number budget.
Representative Austerman asked whether there would be
consideration of moving the appropriation to the agency
budget. Co-Chair Hawker had concerns about having to re-
make the decision in future budget cycles.
Co-Chair Hawker noted one large appropriation that was
missing: $400 million for the governor's scholarship
program. He explained that the item would be a fiscal note
item if passed, and should not be in the budget.
Co-Chair Hawker reviewed the current plan for the budget
process in committee.
2:30:06 PM
Co-Chair Hawker provided an overview of expected
amendments:
· Oil and gas language appropriation: how much and how
funded
· Fuel trigger
· Common budget location for therapeutic courts
· Governor's domestic violence/sexual assault plan: he
believed the committee had come to the conclusion that
the plan must be broader
· Medicaid: increased funding and the policy change at
the federal level; an Department of Health and Social
Services amendment to increase prescription drug
benefits
· Other items from members
Representative Doogan, Co-Chair Hawker, and Co-Chair
Stoltze appreciated the work of staff on the budget.
ADJOURNMENT
The meeting was adjourned at 2:35 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 300 HB302 Operating Budget Summary.pdf |
HFIN 3/1/2010 1:30:00 PM SFIN 3/23/2010 9:00:00 AM SFIN 3/24/2010 9:00:00 AM |
HB 300 HB 302 |
| CSHB 300(FIN) DRAFT VERSION M.pdf |
HFIN 3/1/2010 1:30:00 PM |
HB 300 |
| HB 302 WORK DRAFT CS 26-GH2825 P.pdf |
HFIN 3/1/2010 1:30:00 PM |
HB 302 |