Legislature(2011 - 2012)
05/13/2011 11:28 AM House FIN
| Audio | Topic |
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| Start | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 13, 2011
11:28 a.m.
11:28:27 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 11:28 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
Representative Bill Thomas Jr., Co-Chair
ALSO PRESENT
Representative Mike Chenault; James Armstrong, Staff,
Representative Stoltze; Representative Bob Miller.
SUMMARY
SB 46 BUDGET: CAPITAL
HSCSB 46(FIN) was REPORTED out of committee with
a "do pass" recommendation.
CS FOR SENATE BILL NO. 46(FIN)
"An Act making and amending appropriations, including
capital appropriations, savings deposits in the form
of appropriations to the statutory budget reserve
fund, and other appropriations; making appropriations
to capitalize funds; and providing for an effective
date."
11:28:33 AM
Co-Chair Stoltze introduced the subject matter. He
explained that the meeting would address amendments to the
capital budget.
Co-Chair Stoltze MOVED to ADOPT Amendment 1 (27-
LS800\A.130, Kurtz, 5/13/11):
*Sec.A DEPARTMENT OF NATURAL RESOURCES. The
unexpended and unobligated balance, estimated to be
$456,317, of the appropriation made in sec.1, ch. 82,
SLA 2006, page 77, lines 9-10 (Department of Natural
Resources, Bristol Bay energy development
investigations - $750,000) is reappropriated to the
Department of Natural Resources for Alaska Peninsula
energy development.
*Sec. B. LAPSE. the appropriation made in sec. A
of this Act is for a capital project and lapses under
AS 37.25.020.
*Sec C. This Act takes effect May 17, 2011.
Representative Chenault OBJECTED for the purpose of
discussion.
11:30:26 AM
JAMES ARMSTRONG, STAFF, REPRESENTATIVE STOLTZE explained
that his office was contacted by the Department of Natural
Resources (DNR) following the adoption of the new CS for SB
46 regarding one missed agency reappropriation. Co-Chair
Stoltze added that the item is located in the errors and
omissions category.
Representative Chenault WITHDREW his OBJECTION. There being
NO further OBJECTION, it was so ordered.
Amendment 1 was ADOPTED.
11:30:55 AM
Co-Chair Stoltze MOVED to ADOPT Amendment 2:
Agency: Revenue
Project: AHFC weatherization and Home Energy Rebate
Programs.
Amount: $70,000,000
Funding Source: (1004) General Funds
Explanation: this amendment would add $70,000,000 to
the existing general fund appropriation contained
within the committee substitute, located on page 138,
lines 5-11, thereby increasing the general fund total
to $125,000,000.
Total funding for the programs would reflect
$76,500,000 for AHFC Weatherization Program and
$50,000,000 for AHFC Home Energy Rebate Program.
Representative Gara OBJECTED.
Co-Chair Stoltze explained the amendment. He stated that
$50 million was funded in the capital income account. The
funding source was altered. An additional $20 million was
included for the Home Energy Rebate Program.
Mr. Armstrong clarified that the Senate version of SB 46
allocated $76,500,000 to the Alaska Housing Finance
Corporation (AHFC) weatherization program. The House
version replaced the funding with $76.5 million for the
weatherization program and $50 million for the Home Energy
Rebate Program.
Co-Chair Stoltze clarified that the governor's proposed
capital budget included $26.5 million, but the Senate added
another $50 million.
Representative Gara understood that the governor proposed
$26 million and the AHFC testified in Anchorage that $100
million was needed to maintain the programs at their
current levels. He asked if the purpose of the amendment
was to include an additional $20 million to speed up the
pace.
Co-Chair Stoltze replied that Senator Hoffman requested the
funding go to areas with the greatest needs. He assumed
that the money would continue to be spent at the same
ratio.
Representative Edgmon spoke in support of the amendment. He
believed that additional funding was required for the
programs because prices have increased. He added that the
programs create jobs and function as economic drivers.
11:34:01 AM
Representative Guttenberg affirmed the importance of the
programs. He spoke of his own personal savings as a result
of the rebate program.
Representative Gara WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Amendment 2 was ADOPTED.
11:36:05 AM
Representative Costello MOVED to ADOPT Amendment 3 (27-
LS8001\A.128, Kurtz, 5/12/11):
*Sec. A. Section 13(g), CCS HB 108, Twenty-Seventh
Alaska State Legislature, is repealed
*Sec B. Section A of this Act takes effect may 17,
2011.
Add to Section 13:
Agency: Commerce, Community, and Economic Development
Project: Destination Tourism Marketing Campaign
Amount: $12,000,000
Funding Source: Unrestricted General Funds (1004)
Explanation: This amendment zeroes out the funding of
the Qualified Trade Agreement in the operating budget
and inserts a $12 million supplemental capital
appropriation to the Department of Commerce, Community
and Economic Development for a destination tourism
marketing campaign.
Co-Chair Stoltze OBJECTED.
Representative Costello explained the amendment. She stated
that the amendment provides a $12 million supplemental
capital budget appropriation for tourism marketing for the
Department of Commerce, Community and Economic Development.
The amendment removes the operating budget 50/50 match for
the sake of simplicity. The effective date is May 17, 2011.
Co-Chair Stoltze stated that he did not prefer the
mentioned funding plan. He wished to have the tourism
marketing funded through the operating budget.
Representative Doogan asked if the $12 million would be a
net increase to the capital budget. Co-Chair Stoltze
responded that this year's capital budget contains less
money for tourism than that of last year.
Representative Doogan wondered if this amendment added $12
million to the capital budget. Co-Chair Stoltze replied
yes.
Representative Gara asked if there were additional funds in
either budget for tourism. Co-Chair Stoltze replied yes, as
the amendment repealed Section 13(g) of HB 108.
11:39:40 AM
Representative Gara noted that tourism increases and
decreases with the economy. He explained that the
projection for tourism was 5 percent, a record high. He was
unsure if an exact correlation existed between the tourism
marketing program and additional tourists visiting Alaska.
He was unsure about the connection between an increased
state share and additional tourists. He believed that
tourism was economic and private sector driven. He
expressed concern with the tourism industry's match or
contribution.
Co-Chair Stoltze agreed that much of the evidence regarding
the effectiveness of tourism marketing was anecdotal.
Representative Neuman supported the amendment. He stated
that money in the capital budget should benefit as many
people as possible. He believed that tourism marketing had
many benefits. He added that he did not consider the
funding a subsidy. He agreed that the funding belongs in
the operating versus the capital budget. The capital budget
allows for oversight of the spending.
11:43:47 AM
Representative Chenault discussed the history of the issue.
He recalled a House bill introduced earlier in the session
to reevaluate the methods of funding tourism marketing. He
stated that the industry does contribute taxes greater than
$100 million in Alaska each year. With the downturn in the
economy, he believed that additional state funding was
warranted. He wished for a program in place to address the
issue annually.
11:45:39 AM
Representative Wilson stated that she also hoped for a bill
addressing tourism marketing. She saw the item as a method
of giving back to the industry. She supported the temporary
solution.
Representative Costello responded to Representative Gara
that the tourism businesses bring in $21.4 million through
the corporate income tax in addition to nine other sources
of income to the general fund.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Amendment 3 was ADOPTED.
Representative Doogan MOVED to ADOPT Amendment 4:
*Sec. A. FUND TRANSFER. The sum of $2,200,000,000 is
appropriated from the statutory budget reserve fund
(AS 37.05.540) to the Alaska permanent fund (art. IX,
sec. 15, Constitution of the State of Alaska).
*Sec. B. The appropriation made in sec. A of this Act
takes effect July 1, 2011.
Co-Chair Stoltze OBJECTED.
Representative Doogan explained that the amendment
transfers money in the Statutory Budget Reserve (SBR) to
the Alaska Permanent Fund. The amount listed in the
amendment was based on conversations with Mr. Armstrong. He
explained that $7 billion of state funds will be spent this
session when the two budgets are combined. He argued that
money has not been placed in an inaccessible account for
the purpose of saving. The amendment will leave $10 billion
in the Constitutional Budget Reserve (CBR) in the event of
problems with funding the budget. The amendment was an
attempt to balance the largest budget produced in the
state.
11:49:18 AM
Representative Joule spoke against the amendment. He
explained that he did not see results of poor spending. He
added that the transfer might insinuate an entitlement as
it includes the Alaska Permanent Fund. He believed that
diversification of the funds was beneficial. He stressed
that a large transfer decision requires greater discussion
that that provided with the amendment.
11:51:35 AM
Representative Edgmon applauded the efforts of
Representative Doogan. He understood the spirit of the
amendment and would support a similar concept with greater
discussion. He echoed the comments of Representative Joule.
He added that the liquidity of state government.
11:52:27 AM
Co-Chair Stoltze opposed the amendment. He also agreed with
the spirit of the amendment, but stated that the idea
required greater discussion.
Representative Guttenberg agreed that a greater discussion
was required prior to making the proposed transfer. He
applauded and supported the amendment and the changes made
to the capital budget.
11:55:06 AM
Representative Neuman opposed the amendment. He stated that
the price of oil is declining.
Co-Chair Stoltze clarified that the amendment does not
place the funding in the Permanent Fund Dividend (PFD).
Representative Neuman opined that the money should remain
in the SBR.
Representative Doogan expressed that he was serious about
the amendment. The funds would be transferred to the
Permanent Fund where it would generate an incremental
increase in the dividend. He clarified that the purpose of
the amendment was not to increase the dividend. He stated
that he did not support the management of the CBR. He
believed that the money should be available with a simple
majority. He would support a change in the constitution
supporting the availability of the CBR funds. He wished to
transfer excess state funds to the Permanent Fund, which he
opined was the best option for savings.
Co-Chair Stoltze appreciated Representative Doogan's
consistency regarding the issue.
A roll call vote was taken on the motion to adopt Amendment
4.
IN FAVOR: 3
OPPOSED: 8
The MOTION FAILED (3-8).
Representative Guttenberg MOVED to ADOPT Amendment 5:
Agency: Commerce, Community and Economic Development
Project: Fairbanks North Star Borough - Kiwanis Field
Improvements (TPS 55972v1)
Amount: $2,500,000
Funding Source: General Fund
Explanation: Convert Kiwanis Field from grass to
artificial turf.
Representative Wilson OBJECTED.
Representative Guttenberg explained the amendment. He
stated that artificial turf had many advantages for
athletes. The advantages include reduced injuries, extended
playing seasons, cost effectiveness, longer sport seasons.
He stated that eight artificial turf fields exist around
the state. He wished to see the artificial turf fields
available for all Alaskan students.
Co-Chair Stoltze asked if there was a Capital Budget
Submission and Information System (CAPSIS) request for the
project. Representative Guttenberg replied yes.
Representative Wilson opposed the amendment. She understood
the value of artificial turf, but argued that $1.9 million
was allocated to the Fairbanks Northstar Borough for Parks
and Recreation facilities. She thought that the borough
could create a priority list for the proposed development.
Co-Chair Stoltze stated that he helped initiate discussion
on the topic. He understood the value of the project, but
would oppose the amendment.
12:05:33 PM
Representative Gara understood that Co-Chair Stoltze worked
to promote the incorporation of artificial turf throughout
the state. He emphasized the importance of statesmanship.
12:07:40 PM
Representative Guttenberg thanked the co-chair for his
advocacy of turf fields in Alaska.
A roll call vote was taken on the motion for Amendment 5.
IN FAVOR: 3
OPPOSED: 8
The MOTION FAILED (3-8).
12:09:04 PM
Representative Guttenberg MOVED to ADOPT Amendment 6:
Agency: Commerce, Community and Economic Development
Project: North Star Imagination Library - Literacy
Initiative Project (TPS 55785v1)
Amount: $35,000
Funding Source: General Fund
Explanation: Through a unique partnership the literacy
initiative project encourages parents and young child
to read together.
Co-Chair Stoltze OBJECTED.
Representative Guttenberg stated that the project was
included in CAPSIS. He amended the amount from $50 thousand
to $35 thousand. He stated that the Imagination Library
provides books for preschool children.
Representative Wilson understood that there was money in
the operating budget for Best Beginnings.
Co-Chair Stoltze explained that the funding for Best
Beginnings was reduced in the conference committee hearing
for HB 108.
Representative Gara stated that the Best Beginning's
funding was only partially dedicated to the Imagination
Library.
Mr. Armstrong clarified the part of the bill amended.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Amendment 6 was ADOPTED.
Mr. Armstrong added that the amendment amends Page 68,
Lines 7-9.
12:12:13 PM
Representative Gara MOVED to ADOPT Amendment 7:
Page 20, line 14:
Delete "37,500,000" in both places
Insert "20,000,000" in both places
Adjust fund sources and totals accordingly.
Co-Chair Stoltze OBJECTED.
Representative Gara explained that he sought a fiscally
sound method of expanding the port of Anchorage. The port
was apparently $800 million over budget. In 2003, the
proposed expansion was $227 million and the price steadily
increased to the current amount. Now the projected cost is
$1.1 billion. Most ports and harbors involve local funding,
which increases efficiency. The municipality of Anchorage
has contributed nothing to the port. The amendment reduces
a $37.5 million appropriation down to $20 million. Until
four years ago, the state did not contribute to the port
expansion project. He spoke about the various years' state
appropriations. The largest was $20 million. The governor
proposed $20 million in this year's capital budget. He
agreed that the port required expansion, but proposed
limiting the state contribution to $20 million.
12:16:43 PM
Vice-chair Fairclough spoke in opposition to the amendment.
She commented on the litigation between contractors,
cities, and federal state agencies. She stated that the
port expansion project provides a docking location where 80
percent of goods arrive in Alaska. She added that a
forensic audit was requested by the city of Anchorage. A
prior agreement by a prior administration allowed
flexibility and oversight by the United States Maritime
Administration (MARAD) who hired a subcontractor to manage
the project. From some perspective the contractor failed to
manage sheet pile installation appropriately. The project
began because of the strategic location of the port next to
a military facility. The northern expansion was established
to meet the need of staging and moving military personnel
and moving freight and operation goods in and out of the
state. One agreement establishes a committee in Anchorage
to bring necessary organizations together to establish a
timeline with a cost associated. The reason to invest
additional state money is because the current pilings in
the existing port may be susceptible to failure in the
event of an earthquake. The contract attempts to increase
the stability of the port in addition to the expansion.
Co-Chair Stoltze added that page 20 of the house CS states
that "it is the intent of the legislature that the
municipality of Anchorage submits quarterly progress
reports to the President of the Senate and the Speaker of
the House of Representatives on the port of Anchorage
expansion project detailing all cost overruns and any
significant project scope changes." He understood the
importance of the port.
12:24:05 PM
Vice-chair Fairclough contemplated the idea of asking
Anchorage to contribute municipal funding to the projects.
She supposed that the municipal funding would come as a
result of resident taxation. She did not support the
additional municipal taxation of residents. She believed
that the community of Anchorage was contributing time to
the project.
12:24:50 PM
Representative Doogan supported the amendment. He reasoned
that the cost of work has increased considerably. He
advocated for a reduction of the state's contribution with
the intention of achieving better management and results of
the project. He admitted that the method was crude, but he
accepted the proposed tool as the only one available to
convey the need for changes in the project's management.
Co-Chair Stoltze commented on increased prices for many
capital projects.
Representative Gara stated that a variety of designs are
acceptable for the port project. He added that oversight
might manifest in a variety of ways too. He stressed the
need for oversight. He suggested that legislative hearings
regarding the size of the expansion might prove valuable.
He did not want the city to raise taxes to pay for the
project. He proposed bonding as one solution. He did not
agree that the city would engage in oversight of the
project without funding contributions. He supported the
port's expansion.
A roll call vote was taken on the motion for Amendment 7.
IN FAVOR: 3
OPPOSED: 8
The MOTION FAILED (3-8).
12:30:18 PM
Representative Gara MOVED to ADOPT Amendment 8 (27-
GS1740\Y.2, Kurtz, 5/13/11):
Page 159, lines 14-15:
Delete all material and insert:
"*Sec. 20. FUND TRANSFERS. (a) The sum of $10,200,000
is appropriated from the general fund to the
alternative energy conservation revolving loan fund
(AS 45.88.010)."
Co-Chair Stoltze OBJECTED.
Representative Gara explained the amendment. He stated that
the amendment adds money to a fund created in the SB 220
energy bill. Alaska established a goal of 50 percent
renewable energy within the next decade. He explained that
the fund provides money to private home owners and housing
authorities to upgrade the energy efficiency through the
energy weatherization and rebate programs. Businesses do
not receive the same funding to upgrade their energy
efficiency. He explained that SB 220 contained a revolving
loan fund. For the price of approximately $10 million, a
revolving loan fund providing 50 loans at a time is
possible. Private businesses in rural Alaska do not receive
Power Cost Equalization (PCE). Those are businesses that
might apply for the revolving loan fund. An anomaly of PCE
includes payment of PCE without provision of incentive to
upgrade energy efficiency. The Senate added $2.5 million to
the revolving loan fund, which will result in approximately
two loans per year. He requested support for the modest
increase.
Co-Chair Stoltze stated that he was not excited about other
revolving loan fund.
A roll call vote was taken on the motion for Amendment 8.
IN FAVOR: 2
OPPOSED: 9
The MOTION FAILED (2-9).
Co-Chair Stoltze MOVED to ADOPT Amendment 9:
Agency:
Department of Commerce, Community and Economic
Development
Project:
Juneau_ Cruise Ship Dock Improvements
Amount:
Sec. 7, Page 141, lines 23 and 24 REMOVE ($2,500,000)
Funding Source:
1211 Gamble Tax (UGF)
Agency:
Department of Commerce, Community and Economic
Development
Project:
Sealaska Heritage Institute - Sealaska Heritage
Institute Center
Amount:
Sec. 1, Page 69, lines 28 and 29 ADD $2,500,000
Funding Source:
1211 Gamble Tax (UGF)
Explanation:
Sealaska Heritage Institute proposes the construction
of an innovative institutional facility contributing
to the survival of diversity and richness of
civilization and cultures of the Tlingit, Haida, and
Tsimshian. The project will be a first-rate
institution for the study and education of Native
cultures, preservation of historical papers and
ethnographic collections, and cultivation of Native
arts.
The Sealaska Heritage Institute requested $10 million
in state funding and is funded currently at $2.5
million. This amendment will remove $2.5 million in
Gamble Tax (UGF) from the Juneau- Cruise Ship Dock
Improvements project (leaving $7.5 million and will
increase the amount to the Sealaska Heritage Institute
Center by $2.5 million in Gamble Tax (UGF). It is
recommended that this project now be listed in Section
7 for bill reporting purposes.
Vice-chair Fairclough OBJECTED.
Mr. Armstrong explained the net zero amendment. He
explained that the Juneau delegation proposed to transfer
$2.5 million from the $10 million cruise ship dock
improvement to an existing appropriation with the Sealaska
Heritage Center.
Representative Guttenberg observed that the Morris Thompson
center in Fairbanks was built with the support of the
legislature. He credited the center for its cultural
diversity. He believed that the amendment was worthwhile as
it appeared to accomplish a similar task.
Co-Chair Stoltze added that SB 84 had provisions for tax
credits for Alaska Native Heritage Centers.
Representative Chenault added that the gambling tax was set
aside for new and emerging ports. He thought the project
was good but he cautioned the committee. He stated that
Juneau is not a new or emerging port. He expressed concern
about the use of funds for the stated purpose.
Co-Chair Stoltze added that the amendment provides less
money from the gambling tax funding source.
Vice-chair Fairclough WITHDREW her OBJECTION. There being
NO further OBJECTION, it was so ordered.
Amendment 9 was ADOPTED.
12:37:03 PM
RECESSED
12:51:53 PM
RECONVENED
Co-Chair Stoltze MOVED to ADOPT Amendment 10:
Technical Amendment
Page 180
Modify Sections 56 and Sections 57 as necessary to
make the following bill sections effective May 17,
2011:
36, 37(b), 39(a), 43, 44(a), 44(b), 44(g), 47,
48(b) and 49
This amendment will make the individual HOUSE DISTRICT
specific legislative scope changes of prior year
appropriations - effective on May 17, 2011 instead of
on June 30, 2011.
This will allow grant recipients to continue the
project changes necessary to expend these funds.
Vice-chair Fairclough OBJECTED.
Mr. Armstrong explained the technical amendment. He stated
that the Senate had an effective date of May 17th for any
project scope changes, which would allow those projects a
five week head start.
Vice-chair Fairclough WITHDREW her OBJECTION. There being
NO further OBJECTION, it was so ordered.
Amendment 10 was ADOPTED.
Co-Chair Stoltze MOVED to ADOPT Amendment 11:
Page 159, line 26 and 27
Delete: the Alaska performance scholarship
investment fund
Insert: a fund created for the purpose of providing
education grants or performance scholarships, or both.
Vice-chair Fairclough OBJECTED.
Co-Chair Stoltze explained that the amendment provided
clarifying language changes for the performance scholarship
funds. He added that the funding source was intended for
all advantage/needs based scholarships as well as the
performance scholarships.
Representative Gara thanked the committee for the
amendment. Co-Chair Stoltze agreed that the amendment
provided clarity.
Vice-chair Fairclough WITHDREW her OBJECTION. There being
NO further OBJECTION, Amendment 11 was ADOPTED.
Vice-chair Fairclough MOVED to authorize Legal services and
Legislative Finance Division to make any necessary
technical and conforming changes to the legislation.
Mr. Armstrong acknowledged Rob Carpenter, Amy Fosket,
Katherine Kurtz, Brian Kane, David Teal, Miles Baker, Helen
Phillips, Joe Michel and Karen Rehfeld.
Co-Chair Stoltze stated that Mr. Michel was a resourceful
and valuable employee. He applauded the hard and valuable
work of Mr. Armstrong.
Representative Chenault commented on changes in the finance
committee meeting proceedings since he left.
Vice-chair Fairclough MOVED to report HCSSB 46(FIN) as
amended out of committee with individual recommendations.
There being NO OBJECTION, it was so ordered.
HSCSB 46(FIN) was REPORTED out of committee with a "do
pass" recommendation.
12:59:35 PM
ADJOURNMENT
The meeting was adjourned at 4:12 PM.
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