Legislature(2015 - 2016)SENATE FINANCE 532

02/11/2016 05:00 PM LEGISLATIVE COUNCIL

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Audio Topic
05:07:05 PM Start
05:26:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Ratification of Charity Events
- "Best Of" Skits
- Girl Scouts of Alaska Annual Auction
- Kenai Peninsula Fair Annual Fundraiser
- Kenai River Jr. Classic/Kenai River
Classic/Kenai River Women's Classic
- 27th Annual Fahrenkamp-Kelly Classic Charity
Putting Tournament
- 2016 Sham Jam
- 16th Annual Thanksgiving in March
- "Juneau's Got Talent"
Other Committee Business
- FY17 Legislature Budget
- Anchorage LIO Proposal
                ALASKA STATE LEGISLATURE                                                                                      
                  LEGISLATIVE COUNCIL                                                                                         
                   FEBRUARY 11, 2016                                                                                          
                        5:07 PM                                                                                               
                Approved August 3, 2016                                                                                       
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gary Stevens, Chair                                                                                                     
Representative Bob Herron, Vice Chair                                                                                           
Senator John Coghill                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Charlie Huggins                                                                                                         
Senator Anna MacKinnon                                                                                                          
Senator Kevin Meyer                                                                                                             
Senator Peter Micciche                                                                                                          
Representative Mike Chenault                                                                                                    
Representative Craig Johnson                                                                                                    
Representative Sam Kito                                                                                                         
Representative Charisse Millett                                                                                                 
Representative Mark Neuman                                                                                                      
Representative Steve Thompson, alternate                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Hawker                                                                                                      
                                                                                                                                
OTHER MEMBERS PRESENT                                                                                                         
                                                                                                                                
Senator Dennis Egan                                                                                                             
                                                                                                                                
AGENDA                                                                                                                        
                                                                                                                                
APPROVAL OF AGENDA                                                                                                              
RATIFICATION OF CHARITY EVENTS                                                                                                  
OTHER COMMITTEE BUSINESS                                                                                                        
                                                                                                                                
SPEAKER REGISTER                                                                                                              
                                                                                                                                
Pam Varni, Executive Director, Legislative Affairs Agency                                                                       
      5:07:05 PM                                                                                                              
                                                                                                                                
  I. CHAIR GARY STEVENS called the Legislative Council meeting                                                                
      to order at 5:07 p.m. in Room 532 (Senate Finance) of the                                                                 
      State Capitol. Present at the call were  Senators Stevens,                                                                
      Meyer, Coghill, Hoffman, Huggins, MacKinnon, and Micciche;                                                                
      Representatives Herron, Chenault, Johnson, Kito, Millett,                                                                 
      Neuman,  and  Thompson, alternate  member.  Representative                                                                
      Hawker was absent.                                                                                                        
                                                                                                                                
 II. APPROVAL OF AGENDA                                                                                                       
                                                                                                                                
      VICE  CHAIR HERRON moved that Legislative Council approve                                                                 
      the agenda.                                                                                                               
                                                                                                                                
      The motion was approved without objection.                                                                                
                                                                                                                                
III. RATIFICATION OF CHARITABLE EVENTS                                                                                        
                                                                                                                                
      VICE CHAIR HERRON moved that Legislative Council ratify the                                                               
      Chair's sanctioning of the following charitable events per                                                                
      AS 24.60.080(a)(2)(B):                                                                                                    
                                                                                                                                
      · "Best of" Skits                                                                                                         
      · Girl Scouts of Alaska Annual Auction                                                                                    
      · Kenai Peninsula Fair Annual Fundraiser                                                                                  
      ·  Kenai River Jr. Classic/Kenai River Classic/Kenai River                                                                
         Women's Classic                                                                                                        
      ·  27th Annual  Fahrenkamp-Kelly Classic  Charity Putting                                                                 
         Tournament                                                                                                             
      · 2016 Sham Jam                                                                                                           
      · 16th Annual Thanksgiving in March                                                                                       
      · "Juneau's Got Talent"                                                                                                   
                                                                                                                                
      CHAIR STEVENS said he sanctioned the list of events, all of                                                               
      which had been confirmed as 501(c)(3) organizations.                                                                      
                                                                                                                                
      The motion was approved without objection.                                                                                
                                                                                                                                
 IV. OTHER COMMITTEE BUSINESS                                                                                                 
      a. FY 17 Legislature Budget                                                                                             
      b. Anchorage LIO Project                                                                                                
                                                                                                                              
      a. FY 17 Legislature Budget                                                                                             
                                                                                                                              
      VICE  CHAIR HERRON moved that  Legislative Council per AS                                                                 
      24.20.130 approve the  FY 17 Legislative Council Proposed                                                                 
Budget and  transmit it to  the House and  Senate Finance                                                                       
Committees for their review and action.                                                                                         
                                                                                                                                
CHAIR STEVENS objected for purposes of discussion and asked                                                                     
Pam Varni to speak to the item.                                                                                                 
                                                                                                                                
PAM VARNI, Executive Director of  the Legislative Affairs                                                                       
Agency, said that before members is the Legislative Council                                                                     
Proposed FY 17  Budget. In the entire Legislature budget,                                                                       
there are 15 separate budget components and four separate                                                                       
appropriations. The Legislative Council has  15 of  these                                                                       
components and  three appropriations and that's what  she                                                                       
will be covering.                                                                                                               
                                                                                                                                
Ms. Varni said that the entire Legislature's FY 17 request                                                                      
is a  1.5% reduction from FY 16  Management Plan and 0.5%                                                                       
reduction  from  FY  17  Governor's  Figures,  which  are                                                                       
preliminary  figures. The  main  difference  was  in  the                                                                       
Legislature's budget from FY 16 to FY 17 request, which was                                                                     
a decrease of  over $1.1 million by backing out  the 2.5%                                                                       
cost of living increase and  absorbing those costs in the                                                                       
budget.  The Legislative  Council request  is an  overall                                                                       
increase of $378,500 from the FY 17 Governor's Figures. Ms.                                                                     
Varni went component by component to explain.                                                                                   
                                                                                                                                
For the Legislators Salary and Allowances component, which                                                                      
pays  for  Legislator  salaries,  per   diem  and  annual                                                                       
allowances, there was no change. There was no increase in                                                                       
FY 16 or FY 17.                                                                                                                 
                                                                                                                                
The  Administrative  Services  component  pays  for   the                                                                       
operation of the Division of Administrative Services, which                                                                     
is the main support division for the Legislature along with                                                                     
the Division of Legal and Research Services. In FY 16, this                                                                     
component was reduced by 16 positions and an overall 7.5%                                                                       
reduction; in addition, the Information and Teleconference                                                                      
Section was moved to its own  component and appropriation.                                                                      
Under  Administrative Services,  there's an  increase  of                                                                       
$35,500 to fully fund the Legislature's dues to legislative                                                                     
organizations. The Legislature cut legislative dues in FY                                                                       
16, and full funding is being requested in FY 17; if full                                                                       
funding does not occur, dues will be paid with the amounts                                                                      
in the  Adjusted Base. The  other increase is  $30,500 in                                                                       
order to fully pay interagency services - for central mail                                                                      
services, risk management insurance premiums, and financial                                                                     
services of  AKPAY and  IRIS, the payroll  and accounting                                                                       
systems in  the  State. The  total increase requested  is                                                                       
$66,000.                                                                                                                        
                                                                                                                                
      The  Legislature State Facilities Rent component shows an                                                                 
      increase of $312,500. This component pays for space rentals                                                               
      and some operating expenses associated with space rented by                                                               
      the Legislature statewide. There are increases of $24,900                                                                 
      for CPI rent adjustments in various locations; $45,000 for                                                                
      Anchorage LIO  security; and $242,600  for lease payments                                                                 
      from FY 15 and FY 16 that were not received in prior budget                                                               
      requests; the increases total $312,500.                                                                                   
                                                                                                                                
      Ms. Varni explained that there were no changes from the FY                                                                
      16  budget request  to the  FY 17  budget request in  the                                                                 
      components of Council and Subcommittees, Legal and Research                                                               
      Services, Select Committee on  Ethics, Office of Victims'                                                                 
      Rights,   Office  of   the   Ombudsman,  Information  and                                                                 
      Teleconference,  Legislative  Operating  Budget,  Session                                                                 
      Expenses and Special Session Contingency.                                                                                 
                                                                                                                                
      REPRESENTATIVE KITO asked if the budget request reflected                                                                 
      the removal of the lease costs for the Anchorage LIO in FY                                                                
      17,  noting  that in  December 2015,  Legislative Council                                                                 
      recommended the removal  of that appropriation if certain                                                                 
      conditions were not met, which they were not.                                                                             
                                                                                                                                
      CHAIR STEVENS said that there will be an amendment offered                                                                
      at  this meeting that  would zero  out the  appropriation;                                                                
      however, members need to understand that Ms. Varni, under                                                                 
      the contract, can do nothing more than present the budget                                                                 
      with the full appropriation figure.                                                                                       
                                                                                                                                
      MS.  VARNI added  that in  the request before  Council is                                                                 
      $4,032,000 for the Anchorage LIO lease, which includes $3.3                                                               
      million to the  landlord, $652,000 for operating expenses,                                                                
      and  $45,000 for security. Under the  contract, the lease                                                                 
      clearly  states that  the Executive Director  presents to                                                                 
      Legislative Council an annual request for appropriation for                                                               
      the  lease.  If  there  is  a   non-appropriation by  the                                                                 
      Legislature, that would be taken up by Legislative Council                                                                
      or the Finance Committees.                                                                                                
                                                                                                                                
      SENATE PRESIDENT MEYER said that it appeared that the only                                                                
      area  that had significant increases was  for the various                                                                 
      LIOs throughout the state; if that was so, are any of the                                                                 
      leases  set to expire  and could the  rental rate  be re-                                                                 
      negotiated or offices perhaps even closed if they weren't                                                                 
      being used very much.                                                                                                     
                                                                                                                                
      MS. VARNI said that there weren't big increases in the CPI;                                                               
      for instance, in  Homer, there was a decrease of $14,200;                                                                 
      Cordova went up  $100; Delta Junction went up $1,400. The                                                                 
main increase in this request was for increases needed in                                                                       
FY 15 and FY 16 which were not funded. The only reason this                                                                     
component was not over-expended in those fiscal years was                                                                       
because the Anchorage space expenses during the renovation                                                                      
were not as  high as had been budgeted, and were  used to                                                                       
cover other leases that were not fully funded. The  FY 17                                                                       
request before Council is to cover all of the contractual                                                                       
lease payments.                                                                                                                 
                                                                                                                                
SENATE PRESIDENT MEYER followed up to ask  if the $45,000                                                                       
for Anchorage security was also included.                                                                                       
                                                                                                                                
MS. VARNI confirmed that was correct; although the funding                                                                      
was removed in FY 16, the direction she had received was to                                                                     
include it in the FY 17  budget request. If it is not the                                                                       
desire of  Legislative Council for these  increases, then                                                                       
they can be removed.                                                                                                            
                                                                                                                                
DISCUSSION FOLLOWED  regarding  some confusion  over  the                                                                       
actual amount of the  increase for AKPAY and IRIS payroll                                                                       
and accounting systems.                                                                                                         
                                                                                                                                
SENATOR MICCICHE asked if  Ms. Varni's view was  that the                                                                       
Finance Committees would work for some reductions in this                                                                       
budget or if she was essentially putting forth a status quo                                                                     
budget.                                                                                                                         
                                                                                                                                
MS.  VARNI said  that the  Agency always  tries to  do  a                                                                       
maintenance level budget. She noted for members that in FY                                                                      
14, a total of $1,700 was lapsed; in FY 15, it was $40,700;                                                                     
there was not extra money in the budget request. She said                                                                       
she was trying to present to Council what it looks like the                                                                     
real operating expenses and needs will be.                                                                                      
                                                                                                                                
SENATOR MICCICHE followed up to ask that if the $4,032,000                                                                      
lease fee is removed from this budget, did Ms. Varni know                                                                       
what the reduction would be at $69,345,000.                                                                                     
                                                                                                                                
MS.VARNI said that it would be  a 7.5% reduction from the                                                                       
entire Legislature's budget.                                                                                                    
                                                                                                                                
There was no further discussion.                                                                                                
                                                                                                                                
CHAIR STEVENS requested the amendment.                                                                                          
                                                                                                                                
5:13:07 PM                                                                                                                    
VICE CHAIR HERRON that Legislative Council, having received                                                                     
and reviewed the Legislative Council FY 17 Proposed Budget                                                                      
prepared by  the  Executive Director,  which includes  an                                                                       
      annual  appropriation  of  funds  for  the   Legislature's                                                                
      obligation  as Lessee  for  the 716  W.  4th  Avenue, LLC                                                                 
      Anchorage LIO Building per Section 43 of the Lease executed                                                               
      on September 19, 2015, direct that the budget be amended to                                                               
      remove the appropriation for the Anchorage LIO Building for                                                               
      FY 17 from the Legislature's budget and once amended as is                                                                
      customary have the Chair transmit  the amended Legislative                                                                
      Council budget to the House and Senate Finance Committee's                                                                
      for their review and action.                                                                                              
                                                                                                                                
      CHAIR STEVENS said that the reason for this amendment was                                                                 
      to bring the budget into compliance with the motion passed                                                                
      by Legislative Council on December 19, 2015, giving 45 days                                                               
      for a competitive cost on a per square foot of usable space                                                               
      basis.                                                                                                                    
                                                                                                                                
      There being no discussion on the  amendment, Chair Stevens                                                                
      asked for a roll call vote.                                                                                               
                                                                                                                                
      YEAS:   Stevens, Herron, Meyer, Coghill, Hoffman, Huggins,                                                                
              MacKinnon, Micciche, Chenault, Johnson, Kito,                                                                     
              Millett, Neuman, Thompson                                                                                         
                                                                                                                                
      NAYS: None                                                                                                                
                                                                                                                                
      The motion for the amendment passed 14-0.                                                                                 
                                                                                                                                
      There being no discussion on the motion as amended, a roll                                                                
      call vote was taken.                                                                                                      
                                                                                                                                
      YEAS:   Stevens, Herron, Meyer, Coghill, Hoffman, Huggins,                                                                
              MacKinnon, Micciche, Chenault, Johnson, Kito,                                                                     
              Millett, Neuman, Thompson                                                                                         
                                                                                                                                
      NAYS: None                                                                                                                
                                                                                                                                
      The amended motion passed 14-0.                                                                                           
                                                                                                                                
      b. Anchorage LIO Project                                                                                                
                                                                                                                                
      CHAIR STEVENS reminded members that on December 19, 2015,                                                                 
      Legislative Council passed the following motion:                                                                          
                                                                                                                                
      "…that Legislative Council advises the Legislature not to                                                                 
      appropriate for  the 716 W  4th Avenue  lease pending the                                                                 
      outcome  of  the currently  pending litigation or  unless                                                                 
      negotiations between  Council and  the Legislature and  a                                                                 
      state  entity  within  the  next 45  days  results  in  a                                                                 
competitive cost  on a  per square  foot of  usable space                                                                       
basis."                                                                                                                         
                                                                                                                                
Chair Stevens  said that after  reviewing the information                                                                       
submitted by  the owner,  there did  not appear  to be  a                                                                       
proposal that would result in a competitive cost on a per                                                                       
square foot  basis. In addition, there  seems to be  some                                                                       
confusion and some  unanswered questions from the various                                                                       
proposals that have been presented to Council. He said he                                                                       
was therefore going to engage an independent finance expert                                                                     
to  look at  all  the  options and  make  a sound  fiscal                                                                       
recommendation to the Council. He said that person would be                                                                     
hired as soon as possible and would get a recommendation to                                                                     
Council in an expedited manner. He realized that time was                                                                       
of the  essence due to  the tight timeline of  the budget                                                                       
process and that a final decision needs to be made before                                                                       
adjournment of  the legislative session.  Serena Carlsen,                                                                       
Council's   attorney  from   Stoel   Rives,   made   some                                                                       
recommendations on who might be engaged as an independent                                                                       
finance expert and there will be more to come; he said he                                                                       
would share that information with everyone on Council and                                                                       
would make  sure that the  person chosen would  be beyond                                                                       
reproach and have no connection with anybody in the state                                                                       
of  Alaska; and certainly no  connection with  anybody on                                                                       
Council or  the owners  of the  building. Sound financial                                                                       
advice  had been  requested by  just  about everybody  on                                                                       
Council; up to this point, much of the information has been                                                                     
political and legal advice, and what Council really needs                                                                       
is financial advice.                                                                                                            
                                                                                                                                
There being no further business before the committee, the                                                                       
Legislative Council meeting was adjourned at 5:26 p.m.                                                                          
                                                                                                                                
5:26:08 PM                                                                                                                    

Document Name Date/Time Subjects
2-11 Leg Council Agenda.pdf JLEC 2/11/2016 5:00:00 PM
LEG. COUNCIL MEETING 2.11.16
Sanctioned Charity Events 2.11.16.pdf JLEC 2/11/2016 5:00:00 PM
Leg. Council Meeting 2.11.16
716 W Fourth Avenue LLC Proposal 1.29.16.pdf JLEC 2/11/2016 5:00:00 PM
Leg. Council Meeting 2.11.16
LAA Analysis of 716 W Fourth Ave Proposal 2.5.16.pdf JLEC 2/11/2016 5:00:00 PM
Leg. Council Meeting 2.11.16