Legislature(1993 - 1994)
04/16/1993 09:30 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| * | SB 50 | ||
| SB 165 | |||
| SB 183 | |||
MINUTES
SENATE FINANCE COMMITTEE
April 16, 1993
9:30 a.m.
TAPES
SFC-93, #61, Side 1 (000-end)
SFC-93, #61, Side 2 (575-end)
SFC-93, #63, Side 1 (000-124)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 9:30 a.m.
PRESENT
In addition to Co-chairs Pearce and Frank, Senators
Kerttula, Kelly, and Sharp were present. Senators Jacko and
Rieger arrived as the meeting was in progress.
ALSO ATTENDING: Attorney General Charlie Cole; John Sandor,
Commissioner, Dept. of Environmental Conservation; Bruce
Campbell, Commissioner, Dept. of Transportation and Public
Facilities; Craig Tillery, Assistant Attorney General, Dept.
of Law; Shelby Stastny, Director, Office of Management and
Budget; Ron Lind, Director, Administrative Services, Dept.
of Transportation and Public Facilities; Dugan Petty,
Director, Division of General Services, Dept. of
Administration; Ron Sommerville, Special Assistant, Dept. of
Fish and Game; David Teal, Director, Administrative
Services, Dept. of Labor; Karen Rehfeld, fiscal analyst,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
SUMMARY INFORMATION
SB 50 - FY 94 CAPITAL BUDGET
Discussion was had with representatives of the
following agencies regarding additional amendments
to the Governor's capital budget:
Office of Management and Budget
Dept. of Fish & Game
Dept. of Labor
Dept. of Administration
Dept. of Transportation & Public
Facilities
SB 87 - EXTEND ALASKA PUBLIC UTILITIES COMMISSION
The bill was REPORTED OUT of committee with a zero
fiscal note from the Dept. of Commerce and
Economic Development.
SB 165 - APPROP: ALYESKA SETTLEMENT/FY 93 SUPPLMNT
Teleconferenced discussion was had on both SB 165
and SB 183. Both bills were subsequently HELD in
committee for further review.
SB 183 - APPRO: EXXON VALDEZ,CAPITAL BUDGET FY 94
Teleconferenced discussion was had on both SB 183
and SB 165. Both bills were HELD in committee for
further discussion.
SENATE BILL NO. 50
An Act making appropriations for capital projects; and
providing for an effective date.
(Cross reference to HCS CSSB 183 (Finance) which ultimately
became the FY 94 Capital Budget.)
Upon convening the meeting, Co-chair Pearce announced that
the committee would first deal with additional capital
budget amendments proposed by the Governor. She explained
that the amendments represent additional agency requests
that have not before had public hearings.
SHELBY STASTNY, Director, Office of Management and Budget,
first came before committee. He pointed to a listing of
proposed amendments and noted that representatives of
impacted departments were present to speak to the requests.
DEPT. OF FISH AND GAME
RON SOMMERVILLE, Special Assistant, Dept. of Fish and Game,
came before committee. He explained that the $870.0
addition represents two years of funding for critical
reauthorization of major legislation in Congress (the
Magunson Fishery Conservation and Management Act, The Marine
Mammal Protection Act, and the Endangered Species Act). Co-
chair Pearce voiced her understanding that the annual total
for the appropriation is $435.0. Mr. Sommerville concurred.
DEPT. OF LABOR
Mr. Stastny directed attention to the Dept. of Labor
proposal to move $83.8 from the Worker' Compensation records
automation program into claims handling system support and
imaging consultant services. Co-chair Pearce called for
questions. None were raised.
DEPT. OF ADMINISTRATION
Referencing amendments relating to the Dept. of
Administration, Mr. Stastny said that he would speak to the
Mt. Roberts Marina while DUGAN PETTY, Director,
Administrative Services, Dept. of Administration, would
discuss purchase of the Court Plaza building and expansion
of office space at Sitka.
Mr. Stastny explained that the Mt. Roberts Marina was added
to the capital budget following meetings with Juneau city
officials and the local legislative delegation. It is
intended to provide an economic boost to the city in light
of recent closure of the Greens Creek Mine. Local officials
favored the marina while legislative representatives
proposed expansion of the University. The marina was chosen
for its potential for future economic activity via expanded
ability to provide for larger commercial vessels. In
response to a question from Co-chair Frank, Mr. Stastny
advised that the match would be significant.
Co-chair Frank asked if the proposed marina fits with the
remainder of the capital budget. Are there other grants to
municipalities for projects throughout the state? Mr.
Stastny responded negatively aside from water, sewer, and
school projects. Co-chair Frank voiced his understanding
that the marina is an exception to the Governor's general
policy. Mr. Stastny concurred.
Dugan Petty next came before committee. He explained that
the proposed purchase of the Court Plaza Building and
expansion of office space at Sitka seeks to reduce lease
costs. The Court Plaza request is for $5 million to
purchase the ten-year-old, 36,000 square-foot building
located adjacent to state properties. The $5.4 million
purchase price is supported by appraisals. The department
also seeks to make $612.0 in code compliance, ADA
compliance, and other recommended maintenance improvements.
An additional $317.0 will be needed for moving, build-out,
and office furniture. The department believes it will save
$600.0 and $700.0 annually in what would otherwise be
outgoing lease expenses.
The Sitka office space purchase seeks to buy a condominium
interest in 1,914 square feet of office space now owned by
the City of Sitka. Portions of the Dept. of Fish and Game
and Dept. of Labor would be moved into the space. The
purchase price is $275.0. The project would pay for itself
within ten years. In response to a question from Co-chair
Frank, Mr. Petty explained that both departments presently
occupy space in the building. Staff is overcrowded and in
desperate need of additional space.
Discussion followed between Mr. Petty and Co-chair Frank
concerning the background of the office building at Sitka.
Discussion ensued between Mr. Petty and Senator Rieger
regarding space in the Court Plaza Building now occupied by
the Division of Elections and Ombudsman. Mr. Petty voiced
his intent to leave the Alaska State Credit Union as the
only non-state tenant in the building. The building would
be filled by offices of the Dept. of Law (6,175 sq. ft.),
Dept. of Corrections (10,000 sq. ft.), and Dept. of Military
and Veterans' Affairs (2,440 sq. ft.).
Responding to questions regarding code upgrades for the
Court Plaza, Mr. Petty advised of a 1992 multidiscipline
architectural/engineering inspection recommending that
mechanical and electrical deficiencies be corrected. The
study also identified some required maintenance.
Discussion followed between Co-chair Frank and Mr. Petty
regarding code compliance.
Senator Rieger referenced the Sitka Office Building and
raised questions concerning the cost of the purchase and the
remaining useful life of the twenty-year-old building. Mr.
Petty voiced his expectation that the useful life would be
"30 more years."
DEPT. OF TRANSPORTATION AND PUBLIC FACILITIES
Co-chair Pearce inquired concerning newly appointed
Commissioner Campbell's plans for ISTEA borough allocations.
RON LIND, Director, Administrative Services, Dept. of
Transportation and Public Facilities, said he could not say
exactly what those plans might be. The new Commissioner
looked at the program and feels implementation should be
delayed because of many unanswered questions relating to
engineering and the financial relationship with each
borough. At this point, the Greater Anchorage Borough,
because of its engineering capability and administrative
activities plus the fact that it is an MPO under the Act,
has the closest relationship to the borough plan described
at previous meetings. For other boroughs, it is likely that
engineering for FY 94 would have to be done by DOTPF.
The new Commissioner is concerned that the department does
not appear able to proceed with the earlier-described
program by October 1, the start of the federal fiscal year.
The department seeks to have all projects identified through
the amendment process, the regular budget process, and the
capital budget process left in place. Rather than providing
separate appropriations for core and borough programs in
each region, the department requests a central highway
program for each region. That is the manner in which
federal funds have been appropriated since 1987.
Senator Kerttula voiced his discomfort with centralized
funding for the Central Region, advising that the Mat-Su
Borough is often left wanting in light of funding provided
to Anchorage and Fairbanks. Co-chair Frank noted that while
Anchorage has AMATS in place, the Fairbanks North Star
Borough has no road powers nor planning and design
capability. He attested to concern regarding plans by the
former Commissioner for "a major diversion of funding away
from the Northern Regions." The Norther Region covers areas
from Valdez to the North Slope as well as Nome, Kotzebue,
and Cordova. Co-chair Frank voiced relief that the new
Commissioner intends to further review the plan.
Senator Rieger directed attention to core highway programs
and noted that the Governor's amendments evidence a 6.5%
reduction in Central Region. Southeast shows a wash, but
the Northern Region shows a 10% increase. He then inquired
concerning the logic behind cutting the core program for
Central while increasing it for the Northern Region.
Senator Rieger noted that the proposed ISTEA allocation was
promoted as regionally equitable. It now appears that LBA
approval of a $6 million RPL is causing a shift in total
highway funds statewide. Mr. Lind explained that the
increase in Northern Region (preliminary engineering, right
of way, and utilities) has nothing to do with the fact the
capital budget "went down because the Nome/Council project
was removed." Review of available balances indicated that
if the department is to have alternate projects available in
the future, there must be authorization for preliminary
engineering expenditures. Senator Rieger stressed that
numerous Central Region projects could have utilized the
$3.5 million from the Kenai Spur Road. Instead, the funding
appears to have gone to other parts of the state.
Co-chair Frank pointed to confusion over the difference
between appropriation of money and authorization of
expenditures. The legislature authorizes projects, and the
department then shifts the funding to where it can be spent.
In past allocations, the Central Region has historically
received 45%, the Northern Region (with 62% of the roads)
has received 38%, Southeast 9.5%, the Marine Highway System
6%, and headquarters 1%. The legislature focuses upon
authorization, and the department allocates approved
funding. The legislature should instead focus on the issue
of allocation to ensure that it is equitable.
Discussion followed between members regarding authorizations
versus allocations.
Co-chair Pearce noted the arrival of Commissioner Campbell
and inquired concerning the department plan for ISTEA
funding. BRUCE CAMPBELL, Commissioner, Dept. of
Transportation and Public Facilities, came before committee.
He said he had chosen "to let this thing rest and get a hold
of it later on and then be prepared next year." He
acknowledged discussion of regional boundaries and boroughs
and said that his oath as commissioner is to "look at the
entire state transportation system." He acknowledged need
for equity statewide but added that the driving force of a
good transportation system is not confined by political
boundaries. The commissioner referenced his tenure with the
department in the 1960s and 70s and voiced his believe that
he "did an excellent job of distributing the money and doing
a good job statewide." He then voiced his intention to do
the same during his present tenure.
Commissioner Campbell termed the department proposal for the
borough transportation system "a disaster ready to happen."
With rare exception, boroughs are not ready to accept the
funding, and the department is not ready to administer the
project. The plan was thus stopped and proposed
distribution delayed for a year. Commissioner Campbell
advised that he had received no phone calls disagreeing with
that decision. Funding for FY 94 will flow through the
department's normal program.
End, SFC-93, #61, Side 1
Begin, SFC-93, #61, Side 2
The Commissioner said that he could not say whether
individual boroughs would receive the same funding as under
the proposed ISTEA plan. The department will distribute the
funding as fairly as possible, bearing in mind entire state
transportation needs. Commissioner Campbell said he would
be working on the borough transportation plan and methods of
implementation. He cautioned that while the concept of a
pass-through to boroughs is simple, implementation without
losing federal dollars is very difficult.
Senator Kerttula noted that second-class boroughs with no
road powers rely upon the department for planning and
design. That puts them in poor posture compared to boroughs
with planning and design capability. The Senator noted a
lack of projects for the MatSu area and called for equity.
He advised that Fairbanks has approximately the same
population as MatSu, yet it receives a much greater
allocation. Commissioner Campbell acknowledged having heard
similar sentiments from many other Senators and
Representatives. Similar comments have also been expressed
in the Governor's Office. The Commissioner noted that it
has taken an extended period of time for the system to
evolve to the present point. It will likewise take time to
turn it around.
Responding to a comment by Senator Kelly, Commissioner
Campbell acknowledged that Anchorage, with a population of
over 200,000 and the AMATS planning process in place, was
ready to proceed with ISTEA. The decision to stop the
distribution to boroughs should not affect Anchorage.
Senator Kelly asked if the ISTEA money would be there, and
Commissioner Campbell replied affirmatively.
Senator Sharp voiced support for the Commissioner's decision
to halt ISTEA distribution until the program is better
defined. Commissioner Campbell reiterated that the plan was
in the formative, idea stage. There were no provisions for
implementation. He acknowledged that some boroughs do not
have road powers and suggested that the department might
have to develop a separate plan for each borough.
Senator Rieger asked if the Commissioner would support
inclusion of other projects from the six-year plan in the FY
94 capital budget. Commissioner Campbell explained that, in
the past, the capital budget was not developed on a
district-by-district basis because it is almost impossible
to forecast when a particular project will come to
construction. Design and construction are the easy parts of
the task. Permits and environmental impact statements take
considerable time and are not within department control.
There is thus need for flexibility in project authorization
to allow for the shifting of funding from a project that
encounters problems to one that is construction ready.
Without that flexibility, the state risks loss of federal
funding.
Senator Rieger noted that the Central Region has no design
and construction money in the Governor's capital budget. He
then suggested that it would be useful to have several
projects available as alternates, if necessary.
Commissioner Campbell said that he did not have sufficient
detail to respond. Co-chair Frank voiced his understanding
that Central Region is overauthorized by $30 million, and
the Northern Region in underauthorized by a substantial
amount.
Co-chair Frank attested to need for a clearer understanding
of how the department intends to proceed. Co-chair Pearce
asked if the Commissioner could return to committee tomorrow
morning with information explaining how the department
intends to proceed on projects that have already been
authorized as well as a description of where the department
is in terms of planning for each region. Commissioner
Campbell responded negatively, citing lack of adequate time
to come fully up to speed on department activities after
having been on the job only ten days. Co-chair Pearce
advised that the committee must know what the department's
general plan of action will be for moneys appropriated in
the capital budget. Co-chair Frank concurred in need to
know how much is available in outstanding authorization for
each region as well as how the department intends to
allocate funding in the FY 94 capital budget. Commissioner
Campbell said he would ask department staff to prepare
material for presentation to committee next Monday.
In his closing remarks, Commissioner Campbell explained that
ISTEA is simply the acronym for the present highway bill.
It is not that different than previous bills over past
years. It has some new provisions (specific categories for
spending specific moneys on specific things), but it is
generally along the same lines under which the department
has always operated.
Senator Kerttula voiced his understanding that several
states (Idaho and Oregon) have successfully traded ISTEA
moneys for general fund moneys for easier utilization by
counties. He then suggested that that approach might be
helpful to some boroughs. Commissioner Campbell
acknowledged awareness of the arrangement, but said he was
not knowledgeable of the specifics.
Co-chair Pearce directed that the meeting be briefly
recessed.
RECESS - 10:20 A.M.
RECONVENE - 10:30 A.M.
SENATE BILL NO. 165
An Act making an appropriation to the Alyeska
Settlement Fund and making appropriations from the
Alyeska Settlement Fund; and providing for an effective
date.
SENATE BILL NO. 183
An Act making special appropriations for restoration
projects relating to the Exxon Valdez oil spill and for
oil spill response projects; and providing for an
effective date.
Upon reconvening the meeting, Co-chair Pearce directed that
SB 165 and SB 183 be simultaneously brought on for
discussion. She explained that both bills result from the
EXXON VALDEZ oil spill. SB 183 funding for projects
totalling $50 milliong will flow from settlement of the
criminal case against Exxon. SB 165 appropriates moneys
from a second settlement with strict agreement and consent
decree requirements.
TELECONFERENCE
Co-chair Pearce acknowledged the presence of Attorney
General CHARLIE COLE and CRAIG TILLERY, Assistant Attorney
General, Dept. of Law, and noted a teleconference link to
other areas of the state. She said that Attorney General
Cole and Mr. Tillery would present an overview of projects
within the legislation before the committee proceeds to the
taking of public testimony.
Speaking first to acquisition of former state park lands in
Kachemak Bay, Attorney General Cole noted endeavors had been
ongoing for nearly seventeen years. Approximately $7.5
million of the $900 million civil settlement from the EXXON
VALDEZ oil spill will be applied toward the price of the
lands. That funding was approved by both state and federal
trustees. An additional $7.5 million will flow from the
settlement between the state and Alyeska Pipeline Service
Company. SB 183 contains the remaining $7 million
appropriation, from the restoration fund, needed to comprise
the $22 million purchase price. Attorney General Cole termed
the purchase "the paramount project" sought by
environmentalists and residents of the Kenai Peninsula. It
is strongly supported by Governor Hickel. The Attorney
General urged favorable consideration by committee.
Mr. Cole explained that, as part of the $900 million
settlement decree, the State of Alaska is to be reimbursed
for moneys expended in damage assessment and cleanup. A
like provisions requires that the federal government be
similarly reimbursed. In each of the past two years, the
state general fund received $29 million. The amount of each
payment was agreed upon by the U.S. Department of Justice
and the State of Alaska. The total amount of reimbursement
expressly provided in the consent decrees is approximately
$71 million. There are provisions, however, which allow the
state to recoup additional moneys. The reason only $25
million and $24.5 million were respectively received by the
state and the federal governments each year is because
neither government wanted to unduly "delete" funds available
for restoration.
Future moneys expected as reimbursement in FY 94 have been
applied to the Whittier Road Project. Mr. Cole stressed
that under express conditions of the consent decree $50
million is to be used for restoration, rehabilitation, and
enhancement of damaged resources and services. However, at
the Governor's insistence, special provisions were included
which enable that money to be used for "long-term
environmental monitoring." Those moneys must be used for
those purposes.
In response to a request from Co-chair Frank, Attorney
General Cole provided background information on settlement
amounts and restrictions upon expenditures. He explained
that under the Clean Water Act and other related federal
statutes, moneys recovered from oil spills must be used by
state and federal governments for restoration,
rehabilitation, and enhancement of damaged resources and
services. The state, in its claims against Exxon, proceeded
jointly with the United States under that statute. It did
so because of difficulties in segregating out whether the
United States or the State of Alaska owned and had the right
to recover for damaged resources, i.e., who held the right
to recover for damage to sea otters, the water column, etc.
Under the terms of the civil settlement with Exxon, the
state is entitled to reimbursement for expenditures for
cleanup and damage assessment. These moneys accrue to the
state treasury, unfettered. Remaining moneys in the joint
fund under this settlement must be used for restoration,
enhancement, etc. The Attorney General reiterated that, up
to this time, the state general fund has received $58
million. Future reimbursements should total $15 to $20
million. In response to a question from Co-chair Frank, Mr.
Cole voiced his understanding that the $58 million has been
expended. Co-chair Frank requested a recap of those
expenditures.
The Attorney General next referred to federal prosecution of
criminal cases against Exxon Corporation and Exxon Shipping.
He explained that after lengthy discussions surrounding the
amount of the fine, an agreement was reached between Exxon
and the U.S. Department of Justice for payment of $125
million as part of the criminal fine. Negotiations between
the state and U.S. Department of Justice revolved around
whether the state should share in that amount. The state
took the position that since it had a claim for punitive
damages against Exxon but was not prosecuting that claim, it
should receive a portion of the fine. An agreement was
reached whereby the state would receive $50 million from the
federal criminal prosecution. The agreement requires that
expenditure of the $50 million be limited to restoration
purposes--the same limitation applied to use of civil
settlement funds.
The state recently settled with Alyeska Pipeline Service
Company for miscellaneous economic claims that were not
prosecuted against Exxon. Under the terms of that
settlement, $6 million is to be used for construction of a
road from downtown Cordova to a deep water dock site at
Shepard Point. There is also $7 million each for
construction of docks at Tatitlek and Chenaga, $7.5 million
for the Kachemak Bay purchase, and $1.5 million to
supplement fisheries business tax payments to
municipalities.
Senator Rieger inquired concerning who negotiated the $22
million purchase price for Kachemak Bay lands. Attorney
General Cole indicated he had. As background information,
he explained that when negotiations began, the Seldovia
Native Association wanted considerably in excess of $22
million. The state took the position that any amount beyond
$22 million would not be considered. Following that,
lengthy discussions ensued between representatives of the
nature conservancy and various interest groups, including
those that held logging rights to the land. The $22 million
figure was eventually struck. The Attorney General voiced
his belief that the property could not be purchased for less
than that amount. CRAIG TILLERY, Assistant Attorney
General, came before committee to supplement remarks by
Attorney General Cole. He acknowledged that $22 million
represents the figure the state and other entities reached
in previous years as a result of a number of appraisals. It
reflects years of negotiations.
Senator Rieger directed attention to funding for response
and cleanup research, contained within Sec. 12 of SB 183.
He noted language saying that the Dept. of Environmental
Conservation would "work with the academic community,
inventors, and industry to develop more effective
technologies to deal with oil spills." The appropriation
itself, however, speaks to contracts with private entities
for "research programs and prevention, containment, etc."
He then raised questions regarding differences in wording.
Co-chair Pearce referred to an amendment proposed by Co-
chair Frank and noted that some of the troublesome language
would be deleted.
Attorney General Cole referenced Sec. 4 of SB 183 and noted
the $500.0 appropriation from the spill restoration fund for
construction of the Kachemak Bay State Park visitor center.
He acknowledged that construction of the center might not be
the most appropriate use for the entire $500.0 and suggested
that "and related facilities" be added to broaden the
definition.
End, SFC-93, #61, Side 2
Begin, SFC-93, #63, Side 1
JOHN SANDOR, Commissioner, Dept. of Environmental
Conservation, came before committee in response to a
question from Co-chair Frank. The Commissioner explained
that the specific location of the center has not yet been
determined. The Kachemak State Park citizens advisory board
and the Division of Parks have been reviewing other capital
projects, i.e. trails, access points, etc. A site for the
center will be developed in cooperation with the advisory
board. The Commissioner presented a listing of proposed
projects and associated amounts that he acknowledged could
utilize the entire $500.0. The intent, however, is to place
the visitor center as the highest priority.
Co-chair Frank voiced his belief that if the state is
spending $22 million for a park, the visitor center should
be analogous to that at Portage Lake or Denali Access rather
than a public-use cabin in the wilderness that many people
would not have an opportunity to use.
Co-chair Pearce advised of a three-hour teleconference
window for further discussion of SB 165 and 183, later in
the day.
SENATE BILL NO. 87
An Act extending the termination date of the Alaska
Public Utilities Commission to June 30, 1994.
Co-chair Pearce directed that SB 87 be brought on for
discussion. Senator Rieger MOVED that SB 87 pass from
committee with individual recommendations. No objection
having been raised, SB 87 was REPORTED OUT of committee with
a zero fiscal note from the Dept. of Commerce and Economic
Development. Co-chairs Pearce and Frank and Senators
Kerttula and Rieger signed the committee report with a "do
pass" recommendation. Senator Jacko signed "no
recommendation." Senator Sharp signed "Do not pass."
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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