Legislature(2013 - 2014)HOUSE FINANCE 519
03/03/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 266 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| + | 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
None
ALSO PRESENT
Pete Ecklund, Staff, Representative Alan Austerman; Joan
Brown, Staff, Representative Alan Austerman.
SUMMARY
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,
2/28/14).
Vice-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 267, Work Draft 28-GH2673\C (Wallace,
2/28/14).
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
years.
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
process:
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
check
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
FY15.
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
progresses.
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
FY15.
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
projection.
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
DEVELOPMENT
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
session.
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
DEVELOPMENT
We made no change other than to reorder the
subsections.
Section 18, DEPARTMENT OF NATURAL RESOURCES
In subsection(c) we just made technical wording
changes.
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
ADJUSTMENTS
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
(a).
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,
2014.
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
reference.
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
affirmative.
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
budget.
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
statement:
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
process.
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
System.
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
process.
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
budget.
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
budget.
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
program.
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
solution.
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
base.
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
students.
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
recipients.
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
program.
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
funding.
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
ineffective.
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
area.
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
practical].
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
facilities.
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
members.
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
program
· 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
reviewed.
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
deadline.
Co-Chair Austerman replied that the deadline was 5:00 p.m.
on Wednesday. He discussed the schedule for the following
day.
HB 266 was HEARD and HELD in committee for further
consideration.
HB 267 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
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 |