Legislature(1993 - 1994)
05/10/1994 10:10 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
May 10, 1994
10:10 a.m.
TAPES
SFC-94, #88, Side 1 (000-end)
SFC-94, #88, Side 2 (575-end)
SFC-94, #90, Side 1 (000-542)
CALL TO ORDER
Co-chair Drue Pearce convened the meeting at approximately
10:10 a.m.
PRESENT
In addition to Co-chairs Pearce and Frank, Senators Kelly,
Kerttula, Rieger, and Sharp were present. Senator Jacko
arrived as the meeting was in progress.
ALSO ATTENDING: Senator Adams; Senator Taylor;
Representative Grussendorf; Representative Olberg; Nancy
Slagle, Director of Budget Review, Office of Management and
Budget; Wendy Redman, Vice President for University
Relations, University of Alaska; Ron Lind, Director,
Administrative Services, Dept. of Transportation and Public
Facilities; Duane Guiley, Director, School Finance, Dept. of
Education; Bob Poe, Director, Division of Information and
Administrative Services, Dept. of Environmental
Conservation; Mike Greany, Director, Legislative Finance
Division; Dana LaTour and Susan Sorensen, fiscal analysts,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
SUMMARY INFORMATION
HB 441 - An Act making, amending, and repealing capital and
operating appropriations; and providing for an
effective date.
Extensive discussion was had and numerous
amendments were adopted. SCS CSHB 441 (Finance)
was REPORTED OUT of committee with a "do pass"
recommendation.
HB 455 - APPROP: GOVERNOR'S SUPPLEMENTAL
Discussion was had and two amendments were
adopted. SCS CSHB 455 (Finance) was REPORTED OUT
of committee with a "do pass" recommendation.
HB 441 - ACT MAKING,AMENDING,AND REPEALING CAP. AND OPT.
APPROPS.
Upon convening the meeting, Co-chair Pearce directed
attention to CSHB 441 (Fin)am and noted a number of
amendments:
Amendment No. 1
Co-chair Pearce advised that Amendment No. 1 was proposed by
the administration. NANCY SLAGLE, Director of Budget
Review, Office of Management and Budget, explained that the
amendment would reappropriate the unexpended $1,094,439
balance of an old DOTPF project for partial completion of
the Natural Sciences Building at the University of Alaska.
It also reappropriates balances from three other DOTPF
projects for completion of the new Tok School. Funding for
the school consists of $142,445 from statewide space
planning, $126,030 from facilities planning, and $124,791
from the Kuskokwim Delta regional transportation study for a
total of $393,267.
Senator Frank MOVED to insert the word "partial" between
"for" and "completion" in language relating to the Natural
Science building. The reappropriation would thus be made
"to the University of Alaska for partial completion of the
Natural Science building.
Senator Kelly questioned whether moneys to be reappropriated
dated from past appropriations or were new moneys. Nancy
Slagle attested to the fact that $1,094,439 of the original
$1,350,000 DOTPF appropriation remains unexpended.
Senator Rieger inquired concerning the cost of completion of
the Natural Science building. WENDY REDMAN, Vice President
for University Relations, University of Alaska, advised that
the legislature funded $22 million of the original $27
million cost for the building and told the University to
come back for completion. The cost to finish the facility
is approximately $5 million. With the proposed
reappropriation, the University hopes to open a classroom
and "a couple of labs."
Co-chair Pearce called for objections to Senator Frank's
amendment to Amendment No. 1. No objection having been
raised, the amendment to Amendment No. 1 was ADOPTED.
RON LIND, Director, Administrative Services, Dept. of
Transportation and Public Facilities, came before committee
in response to a question from Senator Jacko concerning the
status of projects slated to provide reappropriation funding
for the Tok School. Mr. Lind explained that funding derives
from "old statewide space planning projects" that are no
longer active. Senator Jacko inquired specifically about
the $220,000 for the Kuskokwim Delta study, and Mr. Lind
explained that the $124,791 scheduled for reappropriation
reflects unused planning funds. Senator Jacko asked if the
department was abandoning need for a regional transportation
system in the area. Mr. Lind said that he could not speak
to need for the project. The department was merely asked to
provide the general fund balance and did so. The original
scope of the work was done. The above-mentioned balance
remains. It could be used for continued planning.
Senator Kelly voiced his disbelief that actual cash remains
from projects dating back to 1981. Co-chair Pearce advised
that cash remains from statewide projects back to 1977.
Senator Rieger asked if the Barnette/Illinois/Phillips
Field/College Road project slated to provide funding for the
Natural Science Building had been completed. Mr. Lind
answered affirmatively. He explained that it was a federal
construction project. Additional portions of the project
may be undertaken in the future, but they will be part of
the "regular federal construction program . . . ."
Co-chair Pearce called for a show of hands on adoption of
Amendment No. 1. Senator Jacko OBJECTED, advising of
continued need for a regional transportation study in the
Kuskokwim Delta. The motion CARRIED on a vote of 5 to 2
(Senators Jacko and Kelly objected), and Amendment No. 1 was
ADOPTED. (See page 5 of these minutes for further action on
this amendment.
Amendment No. 2
Co-chair Pearce explained that Amendment No. 2 was proposed
by the Office of Management and Budget. The House used
lapsing moneys from Arctic Power for public radio but tied
the two together. The Office of Management and Budget has
asked that the appropriations be separated in order for each
to stand on its own merits. Senator Sharp MOVED for
adoption of Amendment No. 2. Co-chair Pearce called for a
show of hands. The motion FAILED on a vote of 3 to 4.
Amendment No. 3
SENATOR ADAMS explained that the $5,000,000 appropriation
would fund a portion of the reconstruction cost for the
Newtok School which burned down in early May.
Reconstruction will cost approximately $10 million. The
district will receive $3.5 million from insurance proceeds.
The intent is to construct a K-12 facility for the village.
The Newtok school is number two on the Dept. of Education's
Priority I list. Senator Adams urged support for
construction of the school to house the 94 students in the
area.
Co-chair Frank inquired concerning the administration's
approach toward solving the problem. DUANE GUILEY,
Director, School Finance, Dept. of Education, explained that
the Newtok High School was totally destroyed by the May 1
fire, and the elementary school was partially destroyed.
Insurance proceeds are based on replacement cost and will
rebuild the high school and refurbish the elementary school.
There is potential for the state to save $3.8 million in
reconstructing the two schools as one K-12 facility by
simultaneously utilizing insurance proceeds and state
revenue.
Further discussion followed between committee members and
Mr. Guiley. He explained that the elementary school at
Newtok is currently number two on the department's priority
list. It is a former BIA school constructed in 1963 and is
overcrowded and out of compliance with current codes. The
department planned to construct an elementary addition to
the high school. In response to a question from Co-chair
Pearce, Mr. Guiley said that the department supports
construction of a single facility but does not support the
proposed fund source.
Senator Kelly voiced concern that costs for the proposed
school appear to total $100,000 per student. Mr. Guiley
said that the estimate for replacement of the elementary
school is $10.8 million. Utilization of the same contractor
to both rebuild the high school and refurbish the elementary
school would reduce costs to $7 million. Construction costs
average slightly over $220.00 per square foot.
Discussion of responsibility for insurance coverage followed
between Mr. Guiley and Senator Kelly. Mr. Guiley advised
that the Newtok school board had adequate insurance in
accordance with statutes.
Noting that statewide moneys are involved, Senator Rieger
suggested that, in the event the school is not constructed,
funding should not be considered district discretionary
reappropriation moneys in future years. He then MOVED for
adoption of the following intent as an amendment to
Amendment No. 3:
It is the intent of the legislature that this
appropriation is not subject to district
reappropriation.
Co-chair Frank voiced OBJECTION to the intent, saying that
the Governor should provide a plan for reconstruction of the
school rather than registering opposition through staff from
the Dept. of Education. SHELBY STASTNY, Director, Office of
Management and Budget, advised that the issue had only
recently been raised. The administration has not yet
developed a plan. Mr. Stastny advised that he had no
objection to the proposed fund source as long as the
committee understands that more general funds will be needed
in the future. Earnings proposed for reappropriation were
to be used for the foundation formula next year. Mr.
Stastny concurred that the problem at Newtok must be
rectified. He voiced his belief that the Governor would
have no objection to Senator Adams' proposal.
Co-chair Pearce called for a show of hands on adoption of
the foregoing intent as an amendment to Amendment No. 3.
The motion carried on a vote of 5 to 2, and the intent was
ADOPTED.
Discussion followed between Co-chair Frank and Mr. Stastny
concerning the department's position on the proposal and
whether or not the Governor would be likely to veto the
appropriation.
Co-chair Frank requested that action on Amendment No. 3 be
HELD* to the bottom of the agenda. No objection having been
raised, IT WAS SO ORDERED. (*See page 15 for further action
on this amendment.)
Amendment No. 1
Co-chair Frank MOVED to RESCIND committee action adopting
Amendment No. 1. No objection having been raised, adoption
of Amendment No. 1 was RESCINDED. Co-chair Frank then MOVED
to delete language relating to the Kuskokwim Delta regional
transportation study. No objection having been raised, the
motion CARRIED and reappropriation of funds from the
Kuskokwim Delta regional transforation study was DELETED
from Amendment No. 1.
Co-chair Frank then MOVED for adoption of Amendment No. 1,
as amended. No objection having been raised, Amendment No.
1 was ADOPTED AS AMENDED.
Amendment No. 4
Co-chair Pearce advised that Amendment No. 4 was proposed by
the Fairbanks delegation. Co-chair Frank MOVED for adoption
of Amendment No. 4. No objection having been raised,
Amendment No. 4 reappropriation of funds for Festival
Fairbanks and Noyes Slough cleanup and upgrade was ADOPTED.
Amendment No. 5
Senator Rieger MOVED for adoption of Amendment No. 5.
Senator Sharp OBJECTED. Senator Rieger explained that some
residents of the Sutton/Glennallen area object to an
appropriation for the power transmission intertie made last
year. Rather than dispute the merits of the $35 million
appropriation from the Railbelt energy fund, Amendment No. 5
provides additional flexibility in selection of a power
project. Senator Rieger advised that both preliminary and
final studies have made clear there are alternatives for
power generation in the area. The amendment thus adds "and
for the design and construction of the Allison Lake
hydroelectric project" as an alternative that could be
funded by the $35 million, zero interest loan. Senator
Rieger suggested that allowing flexibility represents a more
"open-minded" attitude toward power needs. Senator Kerttula
acknowledged opposition to the proposed intertie in part of
the region. He further noted that studies do not "bear out
the economics of the intertie." Senator Rieger stressed
that the proposed amendment would not impact last year's
division of funding. The region remains entitled to the $35
million, zero interest loan. Amendment No. 5 merely
provides the flexibility to consider the Allison Lake hydro
project as well.
REPRESENTATIVE OLBERG came before committee voicing concern
that Amendment No. 5 appears to give equal status to two
projects that are far from equal. The intertie will cost
$2.6 million per megawatt. Allison Lake will cost $5.3
million per megawatt. Further, the intertie is connected to
the Railbelt; Allison Lake is not. The intertie will place
several million dollars into the Railbelt for purchased
power; Allison lake will not. Three million gallons of
diesel will not be burned in Glennallen if the intertie is
constructed, however, diesel will continue to be burned
without the intertie since Allison Lake would not replace
the diesel generators. There is potential to put energy
back into the Railbelt system through Solomon Gulch via the
intertie. Turbidity has the potential to destroy the
Solomon Gulch hatchery. The watershed on the Allison Lake
project is 5.8 square miles and is not always adequately
snowed upon. The Allison Lake project leaves no room for
expansion in the event growth occurs in the area. Senator
Sharp added his understanding that the tie line could
potentially offer up to over five times the deliverable
kilowatt capacity, if insulated and upgraded at a later
time. Allison Lake does not contribute anything of value
toward the statewide power grid, and it does not allow for
transfer and exchange of existing power sources or the mix
of gas, hydro, coal, and liquid fired generating units.
Allison Lake would create another small generating site that
is expensive to operate.
Senator Rieger took exception to the foregoing assertions.
Amendment No. 5 would only allow the question to be decided
in an informed manner by those who understand and manage
utilities. Legislators should not be afraid that the
original project might not turn out, in the end, to be the
best project.
Co-chair Pearce called for a show of hands on adoption of
Amendment No. 5. Amendment No. 5 FAILED on a vote of 2 to 5
(Senators Rieger and Kerttula were in support).
Amendment No. 6
Senator Rieger MOVED for approval of Amendment No. 6. Co-
chair Frank OBJECTED. Senator Rieger attested to conference
committee action, in the FY 95 operating budget, which
targeted reductions at the University of Alaska, Anchorage.
He then questioned whether it was appropriate to target
reductions to one campus, particularly for the WAMI program
which brings grant moneys to the state. Amendment No. 6
would maintain the statewide reductions enacted by the
conference committee report but would undue targeted
reductions for the Anchorage campus. Co-chair Frank
contended that University regents should set policy rather
than the legislature. He suggested that addition of
requested funding for WAMI and a Masters of Social Work
program should be left to the regents.
End, SFC-94, #88, Side 1
Begin, SFC-94, #88, Side 2
Speaking specifically to WAMI, Co-chair Frank said that
University regents could allocate funding for the program if
they determine that doing so is important.
Senator Kelly MOVED that the funding source for WAMI and the
Masters of Social Work program set forth in Amendment No. 6
be changed from the general fund to moneys reappropriated to
the University for completion of the Natural Sciences
building. Co-chair Pearce voiced her understanding that the
amendment to Amendment No. 6, as proposed by Senator Kelly,
would remove $360,700 from the $1,094,439 reappropriation in
Amendment No. 1 and apply it to WAMI and the Masters program
rather than the Natural Science building. Co-chair Frank
OBJECTED. Co-chair Pearce asked if the original DOTPF
funding was statewide or discretionary money from the
Fairbanks delegation. Nancy Slagle responded that such a
determination would be impossible to make.
Co-chair Pearce called for a show of hands on Senator
Kelly's amendment to Amendment No. 6. The amendment FAILED
on a vote of 1 to 6.
Co-chair Pearce then called for a show of hands on adoption
of Amendment No. 6. The amendment FAILED on a vote of 3 to
4 (Senators Kelly, Kerttula, and Rieger were in support).
Amendment No. 6-A
Senator Rieger MOVED for appropriation of $100,000 in
general funds for WAMI. Senator Kelly voiced support for
the program but lack of support for use of general funds.
Co-chair Frank advised of conference committee discussions
wherein it was learned that the House reduction of $700.0
would be disastrous to both the WAMI program and other
classes taught by WAMI instructors. The conference
committee sought to discontinue the WAMI program. The
response from the University was that reduction of $200.0
would eliminate WAMI. The remaining $500.0 would continue
efforts by WAMI instructors in other programs. The
conference committee was somewhat inconsistent in accepting
a compromise House proposal for an arbitrary $100.0
reduction. Co-chair Frank disagreed with use of general
funds for the program. Senator Rieger said that the
proposed funding was no different than other amendments
before committee, it would simply utilize general funds
rather than a "fifteen-year-old lapse."
Senator Rieger subsequently MOVED to withdraw Amendment No.
6-A. No objection having been raised, IT WAS WITHDRAWN.
(See page 15 (Amend. No. 14) for WAMI funding.)
Amendment No. 7
Senator Rieger advised that he would not offer Amendment No.
7 relating to a $115,000 general fund appropriation to the
Dept. of Natural Resources for Chugach State Park, Glen Alps
Road access, maintenance, and improvements.
Amendment No. 8
Co-chair Pearce explained that Amendment No. 8 which would
reappropriate the unobligated balance of some FY 84
appropriations to the Dept. of Environmental Conservation
for purchase of laboratory equipment and supplies was
proposed by the administration. BOB POE, Director, Division
of Information and Administrative Services, Dept. of
Environmental Conservation, advised that as of April 13 the
department drinking water lab was placed on provisional
certification by EPA because of lack of key equipment. The
state lab certifies nine of the twelve private labs in
Alaska to conduct public drinking water studies. When HB
441 was in House Finance, the department sought
reappropriation of three appropriations from FY 84. It is
not clear whether the projects were discretionary or
advanced by the administration. The reappropriation was
changed in the House to allocate funds for the Fairbanks
Health Center. Discussions with both the city manager of
Fairbanks and the borough mayor indicate that only $93,000
is needed for the center. The department is thus asking
that the balance be used to acquire the necessary laboratory
equipment to maintain certification. Without that
certification, private labs will have to be certified by
either the EPA or facilities outside of Alaska. That will
add considerably to costs and may curtail the extent of
their testing.
In response to a question from Senator Jacko, Mr. Poe
explained that reappropriated funds would flow from two
completed projects in Fairbanks and one in Sand Point.
Senator Rieger OFFERED Amendment No. 8. Co-chair Pearce
called for a show of hands. Amendment No. 8 FAILED on a
vote of 2 to 5.
Amendment No. 9
Co-chair Pearce advised that Amendment No. 9 was also
proposed by the Dept. of Environmental Conservation.
Senator Rieger OFFERED Amendment No. 9. Co-chair Pearce
explained that Alaska has signed an emergency services
agreement and an agreement to conduct nuclear waste
monitoring with states in Eastern Russia. Two "Chernobyl-
type" nuclear plants are located in Eastern Russia, and
Alaska has signed agreements "to actually respond." The
agreement to conduct research and development of monitoring
radionuclides and contaminants in Alaska and the Arctic
environment was signed last fall. The $250,000
appropriation from the oil and hazardous substance release
response fund, contained in Amendment No. 9, would provided
funding for that effort.
Senator Kerttula voiced support for the amendment. Co-chair
Pearce advised that she had seen photos of lakes in Eastern
Russia containing radiation pollution. The lakes are
contained by weakening earthen dams that could release
radiation into the Arctic Ocean and ruin Alaska fisheries.
The above-noted project would also determine how to stop
that release.
In response to a question from Senator Kelly, BOB POE again
came before committee. He explained that requested funding
would flow from the (3-cent) prevention account within the
response fund.
Discussion followed among committee members and Mr. Poe
concerning the separation of prevention and response moneys
within the oil and hazardous substance release response fund
as well as Legislative Budget and Audit funding of programs
between Alaska and the Russian coast.
Co-chair Frank posed questions concerning state versus
federal government responsibility for protection of national
borders. Mr. Poe advised that the Russian rapid assessment
project, approved by LBA, was federally funded. Alaska is
the only state likely to be impacted by nuclear contaminants
in Eastern Russia.
Co-chair Pearce called for a show of hands on adoption of
Amendment No. 9. The amendment FAILED* on a vote of 3 to 4
(Senators Kerttula, Pearce, and Rieger were in support).
(*See page 11 for action subsequently ADOPTING Amendment No.
9.)
Amendment No. 9-A
Senator Kerttula MOVED for adoption of Amendment No. 9-A by
Senator Rieger. Senator Rieger explained that the amendment
would reappropriate moneys from a Fireweed Lane project
opposed by local neighborhoods and utilize the funding for
Seward Highway safety turnouts.
Both Co-chair Pearce and Senator Kelly questioned whether or
not funding within the repealer had previously been
allocated elsewhere. NANCY SLAGLE, Director of Budget
Review, Office of Management and Budget, again came before
committee. She voiced her understanding that the
reappropriation relates to federal funds that have not
otherwise been reauthorized. The funds cannot be spent
without approval of Anchorage AMATS. Senator Rieger said
the proposed reappropriation reflects one of three steps
needed to construct a federally funded highway project in
Anchorage.
In response to a question from Co-chair Pearce asking why
Sec. 66 was included in the House bill, DEBORAH DRIVER, aide
to Representative MacLean, came before committee. She
explained that Representative Brown incorporated repeal of
the Fireweed Lane project because residents in the district
are opposed to it. The Dept. of Transportation and Public
Facilities has included the project in its six-year-plan for
the past three years and intends to pursue it. Repeal
relates to authorization only. No funding is yet in place.
Responding to further inquiry by Co-chair Pearce questioning
lack of support for the original project by local residents,
Senator Rieger explained that while the department described
the project as "safety upgrades," the community regards
conversion of the four-lane road to three lanes as a
downgrade. Co-chair Pearce acknowledged correspondence from
the community council opposing the department's center-turn-
lane project. She then called for a show of hands on
adoption of Amendment No. 9-A. The amendment was ADOPTED on
a vote of 5 to 1 (Co-chair Pearce was in opposition, and Co-
chair Frank was temporarily absent from the meeting).
Amendment No. 10
Senator Rieger MOVED for adoption of Amendment No. 10. He
explained that, for a number of years, the legislature has
grappled with proposed construction of a new Alaska
Psychiatric Institute (API). The original proposal called
for a $90 million, 114-bed facility. Legislators balked at
the price, and the proposal has continually been designed
down. The House took the approach that the per bed cost
should be no more than $300,000, and the facility should be
limited to 72 beds. Senator Rieger attested to conjecture
within the mental health community as to size and need for a
new facility. The conflict between the legislature and the
department has been over downsizing and reducing costs.
Senator Rieger said he was not yet convinced the new
facility needs 72 beds, but he stressed that the most
important thing to guard against is the project becoming a
"hole in the ground which would be the start of a $90
million facility." Amendment No. 10 thus limits the
facility to "no larger than 72 beds" and states that capital
costs shall not exceed $28,961,992 (consisting of the
$22,861,992 appropriation within Amendment No. 10 and an
earlier $6,100,000 appropriation).
Co-chair Pearce called for a show of hands on adoption of
Amendment No. 10. Senator Rieger's motion CARRIED and
Amendment No. 10 was ADOPTED.
Co-chair Pearce next directed that the meeting be briefly
recessed.
RECESS - 11:45 a.m.
RECONVENE - 12:00 noon
Upon reconvening the meeting, Co-chair Pearce directed
attention to the next amendment.
Amendment No. 11
She explained that the amendment to insert "67" in capital
project lapse language in Sec. 76 would apply AS 37.05.020
lapse provisions to appropriation of $550,000 in accrued
interest (through June 30, 1995) from the Exxon Valdez oil
spill restoration fund to the Dept. of Transportation and
Public Facilities for maintenance and repair of oil spill
response equipment storage facilities and docks at Tatilik
and Chenega. Co-chair Pearce referenced DOTPF construction
of docks in both communities. Because the docks are
overbuilt for the size of the villages, the communities are
not willing to assume ownership unless assistance in
maintenance and operating costs is provided. Interest
income is available to establish a fund to be used for
operation and maintenance of the docks.
Amendment No. 11 corrects an oversight in the House bill.
It provides for a five-year rather than one-year lapse.
Senator Kerttula MOVED for adoption of Amendment No. 11. In
response to a question from Senator Jacko, Co-chair Pearce
explained that while neither community has sufficient harbor
activity at this time to support operation and maintenance
of the docks, there is hope for future contracts from both
the marine highway system and Alyeska. Amendment No. 11 is
intended to assist the communities in the initial few years.
Co-chair Pearce called for a show of hands on adoption of
Amendment No. 11. No objection having been raised, it was
ADOPTED UNANIMOUSLY.
Amendment No. 9
Senator Jacko MOVED to rescind committee action failing to
adopt Amendment No. 9. No objection having been raised,
prior committee action was RESCINDED. Senator Jacko then
MOVED for adoption of the amendment. Senator Kelly
OBJECTED, voicing his belief that the Dept. of Environmental
Conservation received sufficient FY 95 funding to cover the
$250,000 cost of research and monitoring for radionuclides
and other contaminants in Alaska and the Arctic environment.
Co-chair Pearce called for a show of hands. The motion
CARRIED on a vote of 6 to 1 (Senator Kelly was opposed), and
Amendment No. 9 was ADOPTED.
Amendment No. 12
Co-chair Pearce explained that Amendment No. 12 contains
language providing supplementary funding for municipal
assistance and revenue sharing.
End, SFC-94, #88, Side 2
Start, SFC-94, #90, Side 1
Co-chair Pearce said that a spread sheet listing unlapsed
and unobligated general fund capital appropriations
available for reappropriation from 1977, 1979, and 1981
through 1990 was in the process of being copied for
distribution to members. Unencumbered amounts to be
reappropriated total $3,636,100. Addition of that amount to
operating budget appropriations for municipal assistance and
revenue sharing will result in a 10% reduction from FY 94
funding. The FY 95 operating budget effects a 15%
reduction. Amendment No. 12 provides the additional funding
needed to lower the reduction to 10%.
The Co-chair explained that legal service drafters are
presently working on actual amendment language. A
conceptual amendment could be adopted by committee based on
distributions set forth on the aforementioned spread sheet.
Co-chair Pearce directed that Amendment No. 12 be
temporarily set aside pending arrival of the spread sheet.
(See pages 14 and 15 for adoption of Amend. No. 12.)
Amendment No. 13
Co-chair Pearce referenced Sec. 69 of the House bill and
explained that in light of recent closure of the pulp mill
at Sitka, the city has requested forgiveness of interest on
its portion of the four-dam-pool hydroelectric loan for the
life of the loan. The city is current on both its interest
and principal payments. Sec. 69 provides interest
forgiveness through the year 2018, the remaining life of the
loan. Co-chair Pearce voiced a preference for a shorter
period of forgiveness, directed attention to blank spaces
within Amendment No. 13, and proposed that forgiveness be
provided for two years (January 1, 1994, through January 1,
1996). That would forgive $1 million in interest. If the
economic downturn in Sitka continues at that time, the city
would have the opportunity to return to the legislature and
request further forgiveness.
SENATOR ROBIN TAYLOR and REPRESENTATIVE BEN GRUSSENDORF came
before committee. Co-chair Frank inquired concerning the
net impact of closure of the mill. Senator Taylor attested
to the uncertainty of preliminary estimates but suggested
that closure would result in a significant loss of utility
revenues of approximately 30%. The city does not yet know
what the trickle down effect will be as the impact moves
through the economy. Since the early 1950s, Sitka has never
suffered unemployment above 5%. Unemployment is now 16% and
continues to rise. Closure of the mill has also impacted
the tax base. While the mill has agreed to continue to pay
taxes for a year or two, the tax rolls will be significantly
impacted by loss of approximately 25% of the base
In response to a question from Senator Jacko, Senator Taylor
explained that the city would continue to make principal
payments on the $15 million loan. Interest payments
presently accrue to repayment of the loan fund--part of last
year's energy package. Interest reveue is part of the Dept.
of Community and Regional Affairs, division of energy,
operating budget and is used for numerous projects. If the
interest income is not forthcoming, the money would have to
be replaced by other funds. Senator Jacko inquired
concerning what projects would suffer as a result of reduced
interest payments. Senator Taylor advised that he did not
know. Co-chair Pearce noted that interest forgiveness over
the remaining life of the loan, per Sec. 69, would total
$7.4 million.
Senator Sharp voiced his willingness to provide forgiveness
for "a couple of years or whatever it takes," but he
requested that information on profits made on power sales to
the mill be made available prior to the next legislative
session. He acknowledged that large power contracts have a
"very slim margin of profit."
As additional background information, Representative
Grussendorf explained that approximately $52 million in
municipal bonds have been sold. Sitka also received a $15
million power loan and has paid $6 million in interest to
date. The remaining balance is $12 million. The city and
borough acknowledges its obligation for repayment to the
state. When the bonds were sold, it was understood that the
"dump power" would be purchased by the mill (which has
ability to generate its own power). The mill purchased dump
power generated between 11:00 p.m. and 5:00 a.m. and paid a
reasonable, flat price for it. Moneys in question are in a
utilities enterprise fund. Forgiveness would not
necessarily reflect upon the general fund of the city and
borough. Forgiveness would assist with annual utility
operation and maintenance costs of $800,000 and provide
flexibility for payments on municipal bonds. Sitka floated
its bond issue at a time when other communities sought
grants. With cancellation of the 17-year timber contract,
there is no way another entity will consume "that power."
Senator Kelly voiced his understanding that since the mill
purchased only dump power, energy revenues were not
primarily generated by the mill. Representative Grussendorf
concurred. He added, however, that utility rates have
increased as have property assessments. He asked that if a
limitation is placed on the interest forgiveness, it be of a
length that would allow the municipality time to adjust.
Leniency has been given on a number of power projects.
Discussion of educational funding for Sitka schools followed
between committee members and Senator Taylor.
Senator Sharp OFFERED Amendment No. 13 with a three-year
interest forgiveness period through December 31, 1996. It
would thus cover calendar years 1994, 1995, and 1996.
Senator Jacko voiced his understanding that reduced interest
revenues would impact the 20% of power development revolving
loan funds flowing through the four-dam-pool fund to the
account for statewide power projects.
Discussion of Sitka's return of municipal airport operations
and maintenance to the Dept. of Transportation and Public
Facilities followed.
Co-chair Pearce next advised that the amount of forgiveness
provided by the three-year period suggested by Senator Sharp
would total $1,482,819.80.
Discussion ensued between Senator Kelly and Representative
Grussendorf regarding actions taken by the city of Sitka to
reduce costs in response to reduced revenues.
Representative Grussendorf stressed that an $18 million
annual payroll was lost when the mill closed. That loss
does not account for losses that will be sustained by
vendors who provided goods and services to the mill and its
employees. In response to a question from Senator Sharp,
Representative Grussendorf advised of a current property tax
of 6 mills but added that his assessment increased
$11,000.00.
Senator Kelly voiced support for forgiveness for two rather
than three years. Co-chair Pearce called for a show of
hands on Senator Sharp's proposal that Amendment No. 13
provide interest forgiveness for three years. The proposal
was UNANIMOUSLY ADOPTED.
Amendment No. 12
Co-chair Pearce redirected attention to Amendment No. 12--
relating to municipal assistance and revenue sharing--and
noted distribution of an accompanying spread sheet (copy on
file in the original bill file for HB 441). Senator
Kerttula MOVED for adoption of listed reappropriation items
as a conceptual amendment. Co-chair Pearce reiterated that
reappropriated items total $3,638,300. She then explained
that capture of reappropriation amounts commences on page 12
of the spread sheet and continues forward through Dept. of
Education, state museum security (underlined on page 1).
She then referenced the $218.0 for Dept. of Corrections roof
repair and renovation (page 3 of the tabulation) and advised
that it was lined out in error. The $218.0 is included in
the reappropriation total. Other projects that have been
lined out with appended sectional notes have already been
reappropriated to the indicated sections within SCS CSHB 441
(Finance).
Co-chair Pearce advised that a copy of the spread sheet
would be attached to the bill when it is delivered to the
Senate Secretary. Legal Services will draft the final SCS
CSHB 441 (Finance) with the appropriate repealers.
In response to a question from Senator Kerttula, Co-chair
Pearce said that a total of $3,636.1 had to be achieved to
lower municipal assistance and revenue sharing reductions to
10%. The actual total reappropriated on the spread sheet
is $3,638,300. That is approximately $22,000 in excess of
the amount needed for the 10% reduction.
Co-chair Pearce called for objections to Senator Kerttula's
motion for conceptual Amendment No. 12. Senator Jacko
OBJECTED. The Co-chair called for additional objections.
None were forthcoming, and conceptual Amendment No. 12 was
ADOPTED.
Amendment No. 14
Senator Rieger directed attention to page 1 of the spread
sheet accompanying Amendment No. 12, and MOVED to
reappropriate $100,000 of the unencumbered $103.0 shown for
SLA 90, Ch 208, Dept. of Health and Social Services, API, to
cover the WAMI shortfall. Co-chair Pearce called for
objections. No objection having been raised, Amendment No.
14 was ADOPTED.
Amendment No. 3
Senator Jacko MOVED for adoption of Amendment No. 3, as
amended by intent language. Senator Kelly OBJECTED,
advising that the Newtok school could be reconstructed from
insurance proceeds. Co-chair Pearce called for a show of
hands. The motion CARRIED on a vote of 6 to 1 (Senator
Kelly was opposed), and Amendment No. 3 was ADOPTED.
Co-chair Frank MOVED that SCS CSHB 441 (Finance) pass from
committee with individual recommendations. Senator Kelly
OBJECTED. Co-chair Pearce called for a show of hands. The
motion CARRIED on a vote of 6 to 1 (Senator Kelly was
opposed), and SCS CSHB 441 (Finance) was REPORTED OUT of
committee. All members signed the committee report with a
"do pass" recommendation with the exception of Senator Kelly
who signed "no rec."
HB 455 - APPROP: GOVERNOR'S SUPPLEMENTAL
Co-chair Pearce directed that CSHB 455 (Fin)am be brought on
for discussion and referenced a work draft SCS CSHB 455
(Finance) (8-GH2040\X, Cramer/Utermohle, 5/10/94). Co-chair
Frank further referenced a May 10, 1994, memorandum (copy on
file) listing reductions to the House bill reflected in the
above work draft. He then enumerated the reductions.
Speaking to selected, specific reductions, Senator Frank
explained that the reduction in general relief medical is
intended to place additional pressure on the Dept. of Health
and Social Services. Funding to the Alaska Psychiatric
Institute was reduced by the amount of new federal
disproportionate share moneys ($400.0). The Harborview
Development Center request for certification was not funded.
Fire suppression was also reduced by ($400.0), since the
request represents an estimate of what might be needed.
Funding of $200.0 for Spring Creek Correctional Center was
deleted because new money for new beds was not included in
the operating budget. Deletion of $36.7 for air
quality/solid waste management reflects prior intent
language asking that the Dept. of Environmental Conservation
cover small appropriation items within its existing budget.
Deletion of $163.9 for Spring Creek Correctional Center
relates to settlement of litigation involving the canine
unit. Co-chair Frank voiced his understanding that
department staff sought overtime pay for voluntarily taking
department dogs home with them and caring for them
overnight. The Co-chair recommended that the settlement not
be funded. The $50.0 reduction to family and youth services
within the Dept. of Health and Social Services was made
because the supplemental request was small in comparison to
the overall department budget.
In his concluding remarks, Co-chair Frank referenced a
proposed amendment by Senator Jacko for funding for RATNET.
Co-chair Frank MOVED for adoption of the work draft X
version of SCS CSHB 455 (Finance). No objection having been
raised, SCS CSHB 455 (Finance) was ADOPTED. Co-chair Frank
then MOVED for adoption of Amendment No. 1 appropriating
$55,000 in general funds to the Dept. of Administration for
operating costs of the Rural Alaska Television Network for
the fiscal year ending June 30, 1994. No objection having
been raised, Amendment No. 1 was ADOPTED. Co-chair Frank
then MOVED, as Amendment No. 2, reinstatement of the
$163,861 in general funds for settlement of canine unit
overtime litigation. Senator Rieger asked if funding of a
court settlement is different than funding for labor
agreements in that the Dept. of Corrections would have to
pay the settlement even if the legislature does not
appropriate the funds. Co-chair Frank concurred in that
understanding but advised that he would conduct additional
research prior to a floor vote on the bill. He acknowledged
his preference for denying the funding. Co-chair Pearce
voiced her understanding that the pending motion would
reinstate the following Sec. 51 language from the House
bill:
The sum of $163,861 is appropriated from the
general fund to the Department of Corrections for
settlement of the canine unit overtime litigation
for the year ending June 30, 1994.
Senator Sharp voiced his preference for removal of the
appropriation if the settlement is found to be something the
state does not have to pay.
Co-chair Pearce called for a show of hands on Amendment No.
2. The motion CARRIED with no opposition, and the amendment
was ADOPTED.
Co-chair Frank MOVED that SCS CSHB 455 (Finance) pass from
committee with individual recommendations. No objection
having been raised, SCS CSHB 455 (Finance) was REPORTED OUT
of committee with a unanimous "do pass" recommendation.
ADJOURNMENT
Co-chair Pearce extended her thanks and appreciation to
committee members and staff for the cooperative working
relationship during the past two sessions. The meeting was
adjourned at approximately 1:15 p.m.
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