Legislature(1995 - 1996)
01/30/1996 10:00 AM House STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 30, 1996
10:00 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
ADMINISTRATION PRESENTATION: SUPPLEMENTAL APPROPRIATIONS ON THE
FEDERAL SHORTFALL
PREVIOUS ACTION
None
WITNESS REGISTER
ANALEE MCCONNELL, Director
Office of the Director
Office of Management and Budget
Office of the Governor
P.O. Box 110001
Juneau, Alaska 99811-0001
Telephone: (907) 465-4660
POSITION STATEMENT: Provided comments on the supplemental
appropriation on the federal shortfall.
JOHN KATZ, Special Counsel
Washington D.C. Office
Office of the Governor
444 North Capitol NW, Suite 336
Washington D.C. 20001-1512
Telephone: (206) 624-5858
POSITION STATEMENT: Provided comments on the supplemental
appropriation on the federal shortfall.
MARTHA STEWART, Special Assistant
Washington D.C. Office
Office of the Governor
444 North Capitol NW, Suite 336
Washington D.C. 20001-1512
Telephone: (206) 624-5858
POSITION STATEMENT: Provided comments on the supplemental
appropriation on the federal shortfall.
JANET CLARK, Director
Central Office
Division of Administrative Services
Department of Health and Social Services
P.O. Box 110650
Juneau, Alaska 99811-0650
Telephone: (907) 465-3082
POSITION STATEMENT: Provided comments on the supplemental
appropriation on the federal shortfall.
ACTION NARRATIVE
TAPE 96-07, SIDE A
Number 1841
The Administration Presentation on Supplemental Appropriation on
the Federal Shortfall was called to order by Chair Jeannette James
at 10:10 a.m. Members present at the call to order were
Representatives James, Ogan, Green, Ivan, Porter, Robinson, and
Willis. No members were absent.
CHAIR JAMES called on the first witness, Analee McConnell,
Director, Office of the Director, Office of Management and Budget,
Office of the Governor.
ANALEE MCCONNELL, Director, Office of the Director, Office of
Management and Budget, Office of the Governor, announced she
appreciated the committee members for their time today to receive
an update on the federally funded programs. She stated a bridge
financing bill was proposed in early January due to the uncertainty
in Washington D.C. She also stated John Katz, Special Counsel, was
on-line in Washington D.C. to share his perceptions with the
committee members. She announced there was a great deal of
uncertainty still and the agencies were working minute-by-minute to
update their status. Ms. McConnell said the agencies and the
Administration were walking the line between causing unnecessary
disruption of federally funded services by overreacting, and not
being fiscally responsible by acknowledging what might happen if
the federal funding levels were lowered.
CHAIR JAMES called on the next witness John Katz, Special Counsel,
Washington D.C. Office, Office of the Governor.
Number 1896
JOHN KATZ, Special Counsel, Washington D.C. Office, Office of the
Governor, announced Martha Stewart was also on-line in Washington
D.C. to help answer questions. He said the situation in Washington
D.C. was characterized by uncertainty. He stated he had never seen
a situation like this before and there were no patterns to
extrapolate with accuracy about what might happen. He further
stated Congress passed a continuing resolution until March 15,
1996. He said Congress would not be working on appropriation
issues between now and late February. The current federal budget
process divided itself, he stated, into categories to include
agencies subject to appropriation bills in the normal course of
business, agencies that received money at the conference committee
level, agencies that received FY95 appropriations at the lesser of
either chamber's level, and agencies funded at 75 percent of the
FY95 level. He further said some agencies were funded based on the
FY95 budget at the 95 percent level until September 30, 1996. In
Alaska the agencies most affected were unemployment insurance and
medicaid. The final complications, he said, were the unresolved
differences between the political parties regarding welfare,
medicaid and medicare reform. In conclusion, he stated, there were
tertiary impacts, as well, for agencies in the Department of the
Interior because Alaska was a public land state.
CHAIR JAMES asked where the veterans fitted in this scenario.
MR. KATZ called on Martha Stewart to respond.
Number 2152
MARTHA STEWART, Special Assistant, Washington D.C. Office, Office
of the Governor, replied some, but not all of the veteran's
benefits were protected until September 30, 1996. She asked which
programs in particular Representative James was concerned about.
CHAIR JAMES said Ms. McConnell mentioned the veterans in an earlier
discussion.
MR. KATZ announced he would get back to the committee members in
response to the particular questions regarding veterans.
CHAIR JAMES said thank you.
Number 2170
MS. MCCONNELL said the department was concerned about the disabled
veterans programs. She said it first appeared the programs would
be funded at the 75 percent level. However, every time the
department was ready with a compilation more information was
received that either would higher or lower the estimation. She
said other states were caught in this uncertainty also. She said,
it was difficult to receive the most up-to-date information from
the federal agencies. However, at this point she felt the
veteran's programs were in good shape. She announced Arbe
Williams, Director, Central Office, Division of Administrative
Services, Department of Labor was here to answer any specific
questions.
Number 2228
CHAIR JAMES said she was willing to bridge finance when the only
thing holding up a decision was an accounts receivable from the
federal government that guaranteed funding. She further said she
was concerned if the funding was authorized by the legislature over
and above the state budget then subsequently cut by the federal
government, she asserted, to make up the difference a cut would be
needed elsewhere. However, she suggested language could be devised
to address this issue.
Number 2284
MS. MCCONNELL responded the language proposed initially was pulled
together quickly with the expectation adjustments would be made.
She wondered what should be done about a program which is funded at
the 75 percent level now, but was expected to be funded at a higher
level, because there was no guarantee of the higher federal
funding. She said she asked Mr. Katz if an agency was being funded
at a 95 percent level was it possible Congress would decide to cut
it back to 80 percent, for example, which would cause adjustments.
She said Mr. Katz felt that was unlikely. She also said the
department was concerned about laying people off in the interim
when it was believed the issue would be resolved. There were other
states that did lay people off during the time of uncertainty and
resumed during the next continuing resolution. She stated that was
not a good situation, however. She further said most issues were
working out as hoped, such as unemployment insurance. She said two
departments were here today to answer questions, the Department of
Health and Social Services, and the Department of Labor. She
asserted in some cases general fund matches would be spent at a
faster rate. She stated this was a reasonable risk. In conclusion
she wondered when to scale services that were being scaled back at
the federal level also. She wondered if the cuts should be made
now or at the end of the continuing resolution period resulting in
more adjustments at the end of the fiscal year.
Number 2440
CHAIR JAMES replied she was concerned about eliminating something
that did not need to be cut to make up for the deficit. She
further enquired about the 95 percent level, and asked if it was
higher at the FY96 than the FY95 budget.
MS. MCCONNELL asked if Chair James was referring to federal funds.
CHAIR JAMES replied yes, or was it left at that level.
MS. MCCONNELL replied no, a higher level was not assumed. Except,
in the area of medicaid. She said Alaska was at a disadvantage in
the medicaid proposals in Congress and the Administration was
working closely with the Alaskan Congressional delegation.
Otherwise a more conservative figure was assumed, she stated.
TAPE 96-7, SIDE B
Number 0000
REPRESENTATIVE SCOTT OGAN commented there was an unprecedented
draught in the state right now, and unless it snowed, he alleged,
there would be an early and hot fire season. He wondered how this
would be affected as there was a lot of federal funding that went
toward fighting the wild land fires.
Number 0035
MR. KATZ replied he was not sure because wild land fire fighting
had not been singled out for special attention. He said it was
part of the Department of the Interior's budget which was
uncertain. He said it was an issue for the Alaskan Congressional
delegation.
Number 0060
REPRESENTATIVE OGAN responded he would appreciate it if the issue
was addressed. He reiterated his district had no snow and he was
concerned.
Number 0071
MS. MCCONNELL said it was also an issue that would be addressed in
the supplemental budget with respect to disasters. She stated a
bad break-up was anticipated this year due to climate conditions
and more information would be available later this week.
Number 0125
REPRESENTATIVE PORTER wondered if it was easier to maintain the
previous level or anticipate the reduction and administer at the
reduced level.
Number 0134
MS. MCCONNELL said initially it was to maintain the 95 federal
level which was appropriated in the FY95 state budget. However,
the uncertainty was piece-meal. She said it was never the
intention to use this to address larger policy issues such as a
state response to a federal budget reduction from here forward.
Therefore, she stated, larger policy questions needed to be
addressed as well. She hoped it would be dealt with in the FY97
budget as it would be an appropriate time to think it through, and
temporarily kept things going through the end of the state fiscal
year. She cited the Occupational Safety and Health Administration
(OSHA) was the one agency the Administration now anticipates a
federal funding level of 85 percent, therefore, it was time to
start looking at the issues involved.
Number 0198
REPRESENTATIVE PORTER suggested including the different funding
levels in the bill.
Number 0217
CHAIR JAMES said it was important to know who the people were and
what they did to determine how a decision would affect them, and
suggested a scenario was needed.
Number 0229
REPRESENTATIVE PORTER replied part of the scenario was the state
level, the anticipated federal level, and the requested level.
Number 0238
MS. MCCONNELL said this was the first time there was an extended
time period where the funding level was known. She asked the
committee members if it was timely to bring a supplemental bridge
financing bill forward through the committees, or for the
Administration to proceed as it had been.
Number 0287
CHAIR JAMES said the legislature was confused also. She asserted
it was important to not expand the spending already authorized.
She stated the only way to deal with the issue was through
supplemental funding. She reiterated it was a tough decision and
everyone was in a quandary. She alleged agencies funded at the 90
to 95 percent level probably would not get 100 percent funding.
She further alleged for agencies funded at the 75 percent level it
was questionable if it would be cut altogether. She said she would
take the position it would not be funded beyond 75 percent. She
cited her discussion with Arbe Williams which addressed carry-over
funds used in her department. In conclusion, she suggested a piece
of legislation with guidelines was needed in the event this
happened again.
Number 0418
REPRESENTATIVE CAREN ROBINSON wondered about the status of the bill
introduced.
CHAIR JAMES said a bill had been introduced and was in the House
State Affairs Committee, but it was not before them today because
it needed to be amended. She said the Administration was preparing
a substitute rather than the committee because they had the
information.
Number 0460
MS. MCCONNELL replied she was happy to make the amendments.
However, she said she received information the legislature did not
want to hear the bill.
Number 0479
CHAIR JAMES suggested including parameters in the revised bill.
MS. MCCONNELL said Mr. Katz believed decisions would probably not
be made by March 15, 1996.
CHAIR JAMES replied the bill should not be reactionary but
precedent setting, therefore, more procedural than specific.
Number 0502
REPRESENTATIVE ROBINSON agreed a quick response was needed. She
questioned if pink slips would be given in the next few weeks.
Number 0525
MS. MCCONNELL replied decisions were being made in programs where
the funding level was below 95 percent. Layoffs would be necessary
for agencies funded at the 85 percent level, for example, for the
rest of the year. However, it was part of the legislative budget
process to discuss reductions for FY97.
Number 0569
CHAIR JAMES said specifics were needed along with parameters and
procedures.
Number 0588
MS. MCCONNELL wondered if the committee members would like to hear
from the departments.
CHAIR JAMES called Janet Clark, Director, Central Office, Division
of Administrative Services, Department of Health and Social
Services.
Number 0616
JANET CLARK, Director, Central Office, Division of Administrative
Services, Department of Health and Social Services, said this issue
was crucial to the department because it received over $400,000,000
in federal funds for various programs. She said the department was
tracking this weekly producing a report. The report, she stated,
was based on a letter of credit received from the federal
government, and if the money was not in the letter of credit it was
included in the report even though the funding had been. She said
she did not want to impact the state's cash position.
Number 0672
CHAIR JAMES responded it was not a problem authorizing funds when
there was a cash receivable. However, when there was not a cash
receivable, a problem existed because of the possibility the it
might be adjusted creating more adjustments elsewhere. She cited
medicaid as an example of uncertainty because of changes in the
law, and wondered if the changes would be retroactive.
Number 0731
MS. CLARK replied the department received quarterly advances for
the medicaid program. She cited the department spent over $5
million per week in medicaid payments and any changes would be a
result of a policy decision. She further stated the department
was in a different position than the Department of Labor, for
example, because it received individual grants that went to people.
Therefore, decisions affecting benefit levels were needed. There
were enough funds to keep the current benefit levels until May 1,
1996. Ms. Clark also said the state could charge the federal
government interest for the days cash was not sent, in some
situations.
Number 0811
REPRESENTATIVE PORTER asked if the department had the authority to
reduce a benefit.
Number 0819
MS. CLARK said the current benefit levels were stated in statutes.
Number 0830
CHAIR JAMES replied there was a different spin on everything and
specifics were needed.
ADJOURNMENT
CHAIR JAMES adjourned the Administration presentation at 10:45 a.m.
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