Legislature(1993 - 1994)
04/09/1994 10:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 9, 1994
10:15 a.m.
TAPES
SFC-94, #56, Side 1 (000-end)
SFC-94, #56, Side 2 (000-end)
SFC-94, #58, Side 1 (000-263)
CALL TO ORDER
Co-chairman Steve Frank convened the meeting at
approximately 10:15 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Jacko, Kelly, and
Rieger were present. Senators Sharp and Kerttula arrived
soon after the meeting began. Co-chair Frank did not
attend.
ALSO ATTENDING: Senator Little; Representative Moses;
Representative James; C.E. Swackhammer, Deputy Commissioner,
Dept. of Public Safety; Keith Kelton, Director, Division of
Facility Construction and Operation, Dept. of Environmental
Conservation; Greg Capito, Village Safe Water Section; Dept.
of Environmental Conservation; Doug Redburn, Chief, Water
Quality Management Section, Dept. of Environmental
Conservation; Mike Conway, Director, Division of Spill
Prevention and Response, Dept. of Environmental
Conservation; Remond Henderson, Director, Division of
Administrative Services, Dept. of Community and Regional
Affairs; Shirley Minnich, Director, Division of
Administrative Services, Dept. of Corrections; Nancy Slagle,
Director of Budget Review, Office of Management and Budget;
Traci Cramer, budget analyst, Office of Management and
Budget; Fred Fisher, fiscal analyst, Legislative Finance
Division; and aides to committee members and other members
of the legislature.
ALSO PARTICIPATING VIA TELECONFERENCE FROM ANCHORAGE: Tony
Nakazawa, Director, Community and Rural Development
Division, Dept. of Community and Regional Affairs; Herv
Hensley, Director, Division of Energy, Dept. of Community
and Regional Affairs, Eric Marchegiani, Civil Engineer,
Division of Energy, Dept. of Community and Regional Affairs;
Gloria Manni, Division of Energy, Dept. of Community and
Regional Affairs.
SUMMARY INFORMATION
SB 363 - APPROP: FY 95 CAPITAL PROJECTS AND GRANTS
Capital Budget Overviews were conducted for the
following budget areas:
Department of Public Safety
Department of Environmental Conservation
Department of Community and Regional Affairs
Department of Corrections
University of Alaska
Municipal Grants, etc. (see spreadsheet)
DEPARTMENT OF PUBLIC SAFETY
C.W. SWACKHAMMER, Deputy Commissioner, Dept. of Public
Safety, came before committee. He noted that the department
request of $312.3 for license plates and driver manuals was
funded in the capital budget at $350.0. The $568.5 request
for aircraft equipment overhaul and repairs was reduced to
$400.0. Co-chair Pearce asked how the department would
handle the reduction. Mr. Swackhammer explained that the
bulk of the funding would provide for overhaul and repairs,
primarily contractual work. Remaining moneys would then be
spread over equipment needs. Most department aircraft is
very old, and equipment is dated and has outlived its life
cycle. The $675.0 request for vessel repair (reduced to
$500.0) would be applied to general overhaul and maintenance
of the department's sixteen vessels that are thirteen feet
or larger. The reduction of funding for replacement of
trooper equipment from $491.0 to $200.0 would fund radios,
small computers, fax machines, etc. Reduction will fund
only the highest priority needs. Reduction of fish and
wildlife protection equipment replacement from $370.2 to
$125.0 will cause priority to be given to communication
equipment.
Senator Kelly inquired concerning purchase of new cars by
the department. Mr. Swackhammer explained that they are
purchased through the highway working capital fund within
the Dept. of Transportation and Public Facilities. The
Senator then asked if the department budget includes
requests for new cars. Mr. Swackhammer said that in order
to expand the life of patrol cars and reduce costs, the
department extended the historical turn over time by an
additional year. Senator Kelly asked if cars are purchased
or leased. Mr. Swackhammer advised of his understanding
that both arrangements are used. He added that he was not
familiar with the working of the highway capital fund. The
Senator voiced concern that under lease arrangements, the
legislature would have no knowledge of the numbers of
automobiles or costs involved. Co-chair Pearce suggested
that questions relating to fleet replacement be addressed
when the Dept. of Transportation and Public Facilities
capital budget is reviewed.
[Senator Sharp arrived at the meeting at this time.]
Senator Rieger requested additional information relating to
funding for driver manuals. Mr. Swackhammer agreed to
provide additional materials.
Discussion followed between Senator Rieger and Mr.
Swackhammer concerning airplane wheels, skiis, and floats.
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
KEITH KELTON, Director, Division of Facility Construction
and Operation, Dept. of Environmental Conservation, came
before committee. Speaking to municipal matching grants and
village safe water programs, he explained that both benefit
communities for water and sewer and solid waste programs.
Applications are submitted to communities in July with a
request that they return completed questionnaires to the
department. Returns are then prioritized on the basis of
environmental and health concerns as well as other criteria
relating to project timing and ability to provide operation
and maintenance assistance. The prioritized list is much
longer than the capital budget submittal. Based on the
department submission to the Office of Management and
Budget, the Governor then decides where the funding line
should be drawn.
Two projects are proposed for the 50% municipal matching
grant program. One is $50.0 for upgrade of water
transmission lines from Moonlight Springs to Nome. The
department has worked with the city over a number of years
to replace segments of the old line. The current request is
the third phase of the project.
The second project seeks $2,750.0 for development of a water
project for the city of King Cove to get around problems
associated with the EPA requirement that all surface water
must be filtered. A new water supply will be developed from
an underground aquifer and transported to town. The upgrade
will boost ability to furnish adequate water for the
canneries. The project rectifies both an environmental and
developmental problem. Canneries are providing half the
cost. The municipal King Cove match will include both
private cannery moneys and funding from the federal farmers
home administration.
[Senator Kerttula arrived at the meeting at this time.]
In response to a question from Senator Rieger relating to
the item entitled DEC capital improvement project receipts,
$80.7, Mr. Kelton explained that DEC does not charge
administrative costs against individual projects. Requested
funding supports an engineer in Anchorage who will
administer and oversee the work. Mr. Kelton acknowledged
that the cost would be high if only two projects are funded
for the coming year, but he attested to a $15 to $16 million
backlog of projects over the past several years. The
position will be used to continue work on completion of
those projects. Once the backlog is caught up and if the
next municipal matching grants program is no larger than
this year, there will be no need for the position.
Mr. Kelton noted that the list for village safe water
projects is significantly longer than that for municipal
matching grants. That is due in part to last year's passage
of SJR 25 requesting that the federal government participate
in solving rural sanitation problems. Senator Stevens used
the resolution as leverage to obtain a $15 million matching
grants appropriation through the rural development
administration. It requires that either state or local
funds be used to match the $15 million in federal moneys.
In preparing the list of village safe water grants, the
department used the normal prioritization process and then
conferred with farmers home administration to determine
which projects would be eligible for 50% federal
participation. The list submitted to the Office of
Management and Budget evidenced the dollar-for-dollar match
on eligible projects. Unfortunately, projects that were
high on the DEC priority list were not eligible for federal
moneys because of income requirements. The $20.7 million
general fund request is needed to utilize all federal moneys
and receive the full $15 million benefit. Farmers home
moneys will flow directly to communities, but DEC will
administer the projects on behalf of the federal government.
Receipt and expenditure of federal dollars is thus not shown
in the department budget. Mr. Kelton noted that the budget
shows $2.5 million in federal EPA moneys since, under
federal funding formulas, that amount is receipted and
expended by the department.
In response to questions from Senator Kerttula concerning
the $2.5 million, Mr. Kelton explained that the federal
clean water act contains a revolving loan fund that receives
a $1.5 to $2.0 billion appropriation each year. EPA sets
aside "half of one percent" of that amount ($10 to $20
million) for a national priority list. Alaska has competed
favorably and received over 40% of the national funding in
the last five years. Those projects are not in the same
priority ranking process as the state system. Federal
projects do not fall within the state funding sequence.
Since the department does not know exactly when it will
receive the federal dollars for match with state
appropriations, the department has compiled a list of
projects for which it "thinks" federal EPA moneys will be
forthcoming this year. Three of the projects are on the
department priority list, the other two are not. EPA funds
only apply to sewage projects. Alternative funding must
thus be found for water supplies.
Senator Kerttula referenced a past situation at Bethel and
acknowledged need for safe water for rural communities. He
then noted that many areas are not well adapted to sewer
systems and inquired concerning how the department makes
judgement calls so that moneys are not wasted in areas where
conventional systems are not possible. Mr Kelton commented
on alternatives to piped water and sewer systems. He said
that available technology defeats obstacles posed by
permafrost and poor soil conditions. However, advanced
technology may also entail ongoing operation and maintenance
costs that preclude installation. A feasibility study is
conducted in conjunction with the community and the costs of
viable options are presented. The community then determines
what level of operation and maintenance is most comfortable.
The department then constructs that system.
In further discussion with Senator Kerttula, Mr. Kelton
advised that disposal of waste through incineration is
"terribly expensive" and could probably not be managed in
urban areas much less rural Alaska.
Senator Sharp referenced the state priority list and asked
how many sites have previously had water and sewer systems
installed by the department. Mr. Kelton advised that he
would have to research the question. As a general
statement, he advised that many of the projects are in the
second or third phase. The department normally commences
with a small project that defines the scope of the work and
develops a water source prior to development of the full
scale project. Senator Sharp attested to visits to interior
villages (Noatak was mentioned) that have as many as three
water systems, two of which were abandoned by the department
when the third was constructed. He then spoke to need to
know where and when the department has constructed systems
that failed and the justification for additional funding.
Mr. Kelton advised that he would review department records.
Senator Rieger inquired concerning the number of positions
to be funded. Mr. Kelton said that the CIP request was
increased by 5.5 positions. The increase relates to
additional federal dollars from the farmers home
administration. The $15 million in federal moneys would
entail a 60% increase in the department's engineering
workload. Federal dollars cannot be used to support project
management. The department has therefore asked for state
general fund CIP receipts to support the workload. Senator
Rieger asked for an explanation of activities to be
undertaken by each position, and Mr. Kelton provided a brief
review. In response to a question from Senator Kerttula,
Mr. Kelton said that the department utilizes 99% local
labor.
Discussion followed between Senator Jacko and Mr. Kelton
regarding lack of a request and funding for an environmental
specialist at Bethel.
Senator Sharp asked why federal funding is provided for
phase one of many projects but not for subsequent phases.
Mr. Kelton stressed that the proposed budget represents the
first time the state has had an opportunity to "tap into
federal funds for the village safe water program." He
reiterated that several projects on the current list are not
eligible for federal dollars because of income criteria.
Farmers home will only fund up to 110% of the median family
income for a community. For some projects, sufficient
funding has already been secured. It is thus not necessary
to use farmers home money. In response to a question from
Co-chair Pearce, Mr. Kelton explained that Anaktuvuk was
deleted because a North Slope Borough bond issue of $330
million is already in place.
GREG CAPITO, Village Safe Water Section, Dept. of
Environmental Conservation, came before committee in
response to questions from Senator Kerttula. He explained
that criteria used to score projects relates to health and
environmental needs. Unprotected water sources resulting in
sick residents are given preference. Health hazards in
communities take precedence over the length of time the
community has existed.
End: SFC-94, #56, Side 1
Begin: SFC-94, #56, Side 2
DOUG REDBURN, Chief, Water Quality Management Section, Dept.
of Environmental Conservation, next came before committee.
He explained that the $200.0 request for the polluted
waterbody assessment represents a continuation of efforts
from last year. The department has been assessing a subset
of surface waters polluted over the last several years.
Work is being done subsequent to a negotiated agreement with
EPA to address the matter under a court order issued to EPA
in 1992. Assessment relates to the most seriously polluted
waters in need of either new controls or improved
enforcement of existing controls. The agreement with EPA
splits assessment responsibilities between EPA and the
state. EPA took on water bodies impacted by point sources--
Ward Bay, Silver Bay, Unalaska, etc. DEC assumed a
leadership role with respect to placer mining, urban runoff,
and agricultural areas.
Assessment has resulting in ability to convince EPA that new
controls are not the answer to dealing with placer mining on
the upper Birch Creek drainage. Improved attention to
existing controls will solve current problems. Had the
$30.0 for assessment not been provided, increased controls
on the mining community would have been much more expensive.
A total of 39 waters are on the present list. The
department has completed assessment of 7. The requested
$200.0 will allow for assessment of 7 more.
Mr. Redburn next spoke to the sequence of steps utilized in
department assessments. Further discussion followed
regarding use of settling ponds in mining operations.
In response to a question from Senator Jacko concerning how
the department finds out about polluted waters. Mr. Redburn
explained that under the Clean Water Act, every two years
the department is required to solicit information from both
the public and agencies collecting water quality data. This
inquiry seeks definitive information and documented evidence
of pollution before a water body is placed on a list.
Definitive information is also needed for an area to "get
off the list." Hard data more typically comes from
structured entities--municipalities, federal and state
resource agencies, etc. Photographic evidence is also
accepted from citizens.
Senator Kerttula asked if the department has the power to
close down septic systems that are flowing into and
polluting water bodies. Mr. Redburn acknowledged problems
such as Lake Lucille. He noted need to address such
problems through future zoning, lot size, and proper system
design. The department is working with both the city of
Wasilla and the Dept. of Transportation and Public
Facilities to address both failed septic systems and storm
water drainage directed into the lake.
MIKE CONWAY, Director, Division of Spill Prevention and
Response, Dept. of Environmental Conservation, next came
before committee to speak to the $400.0 request for local
response agreements. He explained that agreements would
establish a relationship with communities to coordinate
spill response. They also allow for reimbursement of
community expenses from the 470 fund, through the state on-
scene coordinator.
The proposed request would fund small, first-aid response
packages consisting of sorbent booms, pads, small pumps,
etc. These packages would allow for initial response before
arrival of more intensive efforts. Requested funds would
flow directly to communities through local response
agreements.
The $150.0 request for radio repeater installation and
maintenance relates to the strategic plan for
communications developed with division of telecommunications
concurrence and review. Funding would provide for
installation of a repeater system at Mt. Susitna to provide
spill response coverage for upper Cook Inlet, Anchorage,
Wasilla, and the Drift River loading terminal. A repeater
at Hope would cover Turnagain Arm and "the defense fuels
pipeline quarter." Installation at Ninilchik would cover
the lower Kenai Peninsula. And a repeater at Ester Dome
would cover the Fairbanks area. There is presently a lack
of communication capability in these areas of high priority.
Co-chair Pearce attested to the fact that one of the
problems encountered after the EXXON VALDEZ spill was lack
of communication systems that could interact. She then
asked if that problem would be addressed through the
proposed repeater system. Mr. Conway advised that that
issue was addressed in development of the proposed system.
The division of telecommunications has ensured that
interactive communication will be provided.
In response to a question from Senator Sharp, Mr. Conway
advised that funding for both projects would flow from the
prevention side of the response fund. Senator Sharp
suggested that commercial cellular link arrangements would
be adequate to cover proposed areas instead of installation
of repeater sites. Mr. Conway pointed to the numerous
systems that must go together for proper response. The
present strategy includes cellular communication.
Co-chair Pearce directed that the meeting be briefly
recessed prior to consideration of requests from the
Division of Energy.
RECESS - 11:20 A.M.
RECONVENE - 11:35 A.M.
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS
Upon reconvening the meeting, Co-chair Pearce noted the
teleconference availability of staff from the Division of
Energy, Dept. of Community and Regional Affairs.
TONY NAKAZAWA, Director, Community and Rural Development
Division, Dept. of Community and Regional Affairs, first
spoke to the department request to increase federal receipt
authority for community block grants an additional $1
million from last year. Increased authority will require no
additional staff or administrative funding. Requested
additional authority anticipates increases in federal
funding for the coming year.
ERIC MARCHEGIANI, Staff Engineer, Division of Energy, Dept.
of Community and Regional Affairs, next addressed the $730.0
for electrical system, life, health and safety improvements.
The rural technical assistance and circuit rider programs
have identified areas of certain communities with electrical
life, health, and safety threats. Senator Sharp asked if
funding would flow from the 20% spilt established last year
within four-dam-pool moneys. Mr. Marchegiani voiced his
understanding that the $730.0 would flow from the general
fund.
HERV HENSLEY, Director, Division of Energy, Dept. of
Community and Regional Affairs, and GLORIA MANNI, Division
of Energy, participated in a discussion of the source of
past funding for safety improvements and the 40/40/20 spilt
within four-dam-pool moneys. Co-chair Pearce voiced her
understanding that small utility improvements were to flow
from the 20%. REMOND HENDERSON, Director, Division of
Administrative Services, Dept. of Community and Regional
Affairs, briefly spoke from Juneau in an attempt to clarify
the issue. Ms. Manni spoke to differences between the
$730.0 request and a subsequent $2 million request to be
funded from four-dam-pool moneys. She stressed that the $2
million request represents matching grants. The division
did not believe utilities included within the $730.0 request
would be able to provide a match. The match is the major
difference between the two requests.
Senator Kerttula expressed a lack of confidence in the
division of energy and questioned proposed expenditures
without specific projects.
Discussion of use of power cost equalization moneys also
followed. Senator Sharp voiced his understanding that PCE
moneys were to ensure the $17 million funding level rather
than to provide for construction and modification. Senator
Jacko concurred in that understanding. Remond Henderson
noted that a small portion of the fund allows for 3% grants.
That is the source of the $2 million request from the
original $66 million. Ms. Manni further explained that
under legislation from last year, 40% of the funding flows
to power cost equalization and rural electrification.
Another 40% flows to the Southeast transfer fund and the
remaining 20% to the power project fund for loans. Funding
utilizing $2 million from the 20% split is in the loans
budget. Moneys expected to be received in the four-dam-pool
transfer fund total $10.6 million. Of the 40% flowing to
the power cost equalization fund, 3% is requested for small
utility improvements. That funding must, by law, have a 25%
match.
Co-chair Pearce requested a list of projects to be funded
from the $2 million request for bulk fuel system emergency
repairs and upgrades. Mr. Marchegiani explained that a list
had been developed covering three areas:
1. Emergency services that must be done as soon as
possible.
2. Areas where matching funds are available.
3. Areas where seed moneys are needed for upgrade
projects.
He then said that emergency repairs would be done for
Ambler, Brevig Mission, Elim, Grayling, Holy Cross, Kiana,
Koliganek, Nulato, and White Mountain. Areas involving
matching funds include Gambell, Kivalina, Savoonga, and
Shishmaref. Co-chair Pearce asked that the complete list be
faxed to members. She also asked for lists of probable
grantees for small utility improvements and Southeast energy
fund grants. Ms. Manni explained that communities must
apply for the grants, and a list has not yet been compiled.
Co-chair Pearce voiced her understanding that the requested
$100.0 for an organization grant relates to Yakutat. Mr.
Henderson explained that the requests reflects the final
payment required by statute. Areas which organize into
boroughs receive $300.0 the first year, $200.0 the second,
and $100.0 the third.
End: SFC-94, #56, Side 2
Begin: SFC-94, #58, Side 1
DEPARTMENT OF CORRECTIONS
SHIRLEY MINNICH, Director, Division of Administrative
Services, Dept. of Corrections, came before committee to
speak to the $1.0 million for statewide facilities renewal
and replacement. She noted that six of the state's
facilities are over 20 years old. Reduction of funding from
the requested $3,075.0 to $1.0 million will place the
department in the position of deferring essential projects
while providing only emergency repairs and replacements.
Co-chair Pearce asked how the department would prioritize
projects. Ms. Minnich explained that the list of needed
repairs, compiled last October, was not in priority order.
Prior to establishing priorities, the department will have
to assess needs at individual facilities and set priorities
according to what is most critical. Senator Rieger asked if
listed projects result from code compliance inspections.
Ms. Minnich acknowledged that many of the repairs would
bring facilities into code compliance. She advised that she
could not specifically identify projects that would do so
nor affix a dollar amount to the cost.
UNIVERSITY OF ALASKA
Co-chair Pearce directed attention to the $120.0 request for
the University of Alaska, Fairbanks, for virus free seed
potato research and referenced the substantial amount of
accompanying backup information.
GRANTS TO MUNICIPALITIES
Co-chair Pearce directed attention to the list of municipal
grants and advised that the committee would not review each
grant individually. She specifically noted, however, the $1
million direct grant to the City of Haines, Port Chilkoot
Dock expansion.
Senator Kelly advised that he had no questions concerning
the grant to Haines, but he voiced his understanding that
many amendments for capital matching grants were being
proposed by the Governor's office. He then asked if the
amendments had been cleared through local communities.
NANCY SLAGLE, Director, Division of Budget Review, Office of
Management and Budget, came before committee. She explained
that all changes contained within amendments were based on
information provided by the communities. In some instances,
communities had not yet submitted requests when the Office
of Management and Budget constructed the original capital
budget, or specific changes, reprioritization, or changes in
dollar amounts were requested by the communities.
Senator Rieger inquired concerning the method of
prioritizing grant projects. Nancy Slagle explained that
communities are asked to provide a listing of capital
projects. The projects must be greater than $10.0, and
communities must provide an in-kind or cash match. Once the
Office of Management and Budget identifies the amount of
available funding, it then proceeds through each priority
list and funds as much as possible. In response to a
further question from Senator Rieger concerning community
block grant funding, Ms. Slagle advised that the
administration does not review municipal grant requests to
determine if they might fit within other funding.
Communities have been advised that projects for planning or
the conduct of a specific study do not qualify under the
capital matching grant program. Senator Rieger voiced
concern that there appears to be no coordination between the
two community grant programs.
Speaking to capital matching grants, Ms. Slagle advised of a
formula for determining what each community will receive.
Dollar amounts are based on population multiplied by a
certain factor that depends upon the size of the community.
The minimum is $25.0. In response to a question from
Senator Jacko, Ms. Slagle explained that unincorporated
communities receive $25.0. Senator Jacko voiced his
understanding that in some instances the $25.0 flowed to the
borough for distribution, and communities within the borough
did not receive the minimum. Co-chair Pearce advised that
capital matching grant statutes would have to be amended to
provide the minimum to approximately 70 communities that
fall into the situation described by Senator Jacko. Senator
Sharp voiced his understanding that if moneys are to flow to
communities within boroughs, then the borough population
count would have to be reduced.
Discussion followed regarding situations where population
numbers from unincorporated communities are including in
borough population totals, the borough receives capital
matching grant funding based on that population, and less
than the minimum $25.0 subsequently accrues to the
communities. Senator Rieger voiced concern that stand-alone
communities with as few are 24 people might be entitled to
the $25.0 grant. He then asked that the Dept. of Community
and Regional Affairs provide population figures for
unincorporated communities. Co-chair Pearce also requested
a list of unincorporated communities within boroughs and the
populations of those communities. Senator Jacko advised
that Representative Moses has introduced legislation to
correct the existing formula.
RECESS
Co-chair Pearce directed that the meeting be recessed for
approximately half an hour prior to commencement of
discussion of capital projects for the Dept. of
Transportation and Public Facilities. The meeting was
recessed at approximately 12:15 p.m.
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