Legislature(1995 - 1996)

05/12/1995 11:10 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          May 12, 1995                                         
                           11:10 p.m.                                          
  TAPES                                                                        
                                                                               
  SFC-95, #71, Side 1 (000-end)                                                
  SFC-95, #71, Side 2 (575-105)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick  Halford, Co-chairman, convened the  meeting at                 
  approximately 11:10 p.m.                                                     
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chairmen Halford  and  Frank,  Senators                 
  Donley, Phillips, Rieger, Sharp, and Zharoff were present.                   
                                                                               
  ALSO ATTENDING: Senate President Drue Pearce; Senator Adams;                 
  Senator  Duncan;  Senator  Hoffman; Senator  Leman;  Senator                 
  Miller;  Senator  Salo; Senator  Taylor;  Senator Torgerson;                 
  Representative Brice; Representative  Davies; Representative                 
  Kubina;   Representative   Williams,    Annalee   McConnell,                 
  Director,  Office of  Management  and Budget;  Nancy Slagle,                 
  Director of Budget Review, Office  of Management and Budget;                 
  Mike  Greany, Director,  Legislative Finance  Division; Fred                 
  Fisher, fiscal analyst,  Legislative Finance Division;  John                 
  Bitney, aide to the Legislative  Budget and Audit Committee;                 
  and aides  to  committee members  and other  members of  the                 
  legislature.                                                                 
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 268 -  APPROP: FY 96 CAPITAL PROJECTS BUDGET                              
                                                                               
            A sectional review of draft SCS CSHB 268 (Fin) (9-                 
            GH0024\O, Utermohle, 5/12/95) was presented by Co-                 
            chairman  Halford.   Comments  in response  to the                 
            draft  were made  by Annalee  McConnell and  Nancy                 
            Slagle on behalf of the administration.  Technical                 
            corrections to  the document were  highlighted for                 
            subsequent amendment on the  floor of the  Senate.                 
            SCS CSHB 268  (Fin) was REPORTED OUT  of committee                 
            with a "do pass" recommendation.                                   
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 268(FIN)                                               
                                                                               
       An   Act  making   and  amending   appropriations;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chairman Halford directed that CSHB  268 (Fin) be brought                 
                                                                               
                                                                               
  on for discussion and referenced a  draft SCS CSHB 268 (Fin)                 
  which  he explained  includes a  number of  components.   He                 
  acknowledged  need   for  technical  amendments,   citing  a                 
  duplicate section as  an example, and  referenced a list  of                 
  reappropriation sections by district.                                        
                                                                               
  The capital portion  of the  bill totals approximately  $112                 
  million in general fund dollars.  In terms of categories, it                 
  commences with the federal match for roads, airports, sewer,                 
  and  water; adds  the capital  matching grant  program  at a                 
  total of $20 million; picks  up approximately $10 million in                 
  statewide  programs and  projects  (primarily the  executive                 
  branch and the court  system); picks up the sewer  and water                 
  municipal match; includes the largest  project in each House                 
  district; picks up "some  university projects in  Fairbanks,                 
  Anchorage,  and  MatSu;  includes  a  number of  agency  and                 
  governor's office adjustments;  picks up  the short list  of                 
  AHFC  projects; includes  70  sections of  reappropriations;                 
  includes   supplementals;   provides   statewide  university                 
  maintenance  at  $35  million  out  of AHFC;  includes  full                 
  funding for the  education foundation  formula and the  full                 
  single site school  list for  a total of  $890 million;  and                 
  also includes  a deposit to  the principal of  the permanent                 
  fund.                                                                        
                                                                               
  Co-chairman Halford explained that projects associated  with                 
  federal match (roads, airports, sewer, water) are similar to                 
  earlier versions of the bill.  The other $18 million relates                 
  to projects that have "gone back and forth."  The university                 
  and sewer and water projects represent the  two major needs.                 
                                                                               
                                                                               
  The Governor's  budget contained approximately  $200 million                 
  in  proposals.    The proposed  Senate  version  is shorter.                 
  However, there are few items in the Senate version that were                 
  not also in  the Governor's budget.  Projects  were selected                 
  in an attempt to maximize federal funds.                                     
                                                                               
  ANNALEE  McCONNELL,  Director,   Office  of  Management  and                 
  Budget, and NANCY SLAGLE, Director  of Budget Review, Office                 
  of Management and Budget, came before committee.                             
                                                                               
  Co-chairman   Halford   explained    that   the   list    of                 
  municipalities in the  front section  of the bill  evidences                 
  those that have  not applied for the capital  matching grant                 
  programs.      Listing  reflects   reservations   for  those                 
  communities.  Other communities are listed with the specific                 
  grant for  which they have applied.  There is $20 million in                 
  the capital  matching grant  program.   Expenditure are  not                 
  exactly the same  for all  because communities can  maintain                 
  moneys in the fund and build for a particular project.                       
                                                                               
  Co-chairman Halford noted  that he had earlier  neglected to                 
  mention  that matches for  the base school  in Fairbanks and                 
                                                                               
                                                                               
  the two in Anchorage are  included with contingency language                 
  that requires receipt  of federal funds or  the match lapses                 
  back to the general fund.  That funding was in the  original                 
  $100 million  draft.  Numbers for the  Anchorage schools are                 
  "a little bit less," based on recent communications with the                 
  military.                                                                    
                                                                               
  Co-chairman Halford commenced the following sectional review                 
  of the bill:                                                                 
                                                                               
  Sec. 1 relates to federal receipts.                                          
                                                                               
  Secs.  2  and  3  provide  appropriations  for  the  capital                 
  matching grant  program.  Grants  are contained in  the long                 
  list within  the bill  and in  actual community  allocations                 
  shown in the back section of the bill.                                       
                                                                               
  Secs. 4 and 5 retain interest on grant accounts.                             
                                                                               
  Sec. 6  contains base  school language.   Annalee  McConnell                 
  advised that  there  is no  assurance of  federal funds  for                 
  Aurora and Ursa Minor.  She recommended that rather than add                 
  them at this  point and tie up general funds that may or may                 
  not work for the match, it would make more  sense to include                 
  intent language  allowing for consideration  in January  and                 
  wait to  "see where we end up with Congress."  Ms. McConnell                 
  acknowledged  a $500.0 need  relating to life  and safety at                 
  Aurora and concurred that that  appropriation should be made                 
  at this time.                                                                
                                                                               
  For the school  at Eielson,  Ms. McConnell recommended  that                 
  since  in-hand  federal funds  cover  the amount  needed for                 
  repairs to bring the school up to code, funding should be at                 
  that level.   Should  Fairbanks  wish to  have a new  school                 
  instead  of  upgrade  of  the   two  existing  schools,  the                 
  community could bond the issue.                                              
                                                                               
  Senator  Zharoff  expressed  concern  and  raised  questions                 
  regarding  REAA  schools  listed on  the  priority  list and                 
  submitted  by  the Governor  in  his capital  request.   Co-                 
  chairman Halford  acknowledged that  REAA  schools were  not                 
  included in the proposed draft.   Ms. McConnell advised that                 
  the  administration's school  list totaled  $13,674.0.   She                 
  noted that the  school at Eielson is ranked 28th  or 29th on                 
  the  Dept.  of Education  list  and  stressed  need to  fund                 
  schools in the priority order listed by the department.  The                 
  administration  is  not  recommending  construction  of  new                 
  schools.  It is focusing on maintenance only.                                
                                                                               
  Co-chairman  Halford   explained  that  base   schools  were                 
  selected because of an understanding that they are federally                 
  matched and federal moneys are available.                                    
                                                                               
  Further discussion ensued regarding funding for REAA schools                 
                                                                               
                                                                               
  and bonding for construction  of schools in  municipalities.                 
  Senator Zharoff stressed that opportunities for  new schools                 
  are very limited in REAAs.  He urged that funding adhere  to                 
  the priority list prepared by the Dept. of Education.                        
                                                                               
  Ms. McConnell said she would provide alternative, contingent                 
  language for  schools, similar  to that  proposed for  DOTPF                 
  federal match funding.                                                       
                                                                               
  Sec.  7  appropriates  $2  million  from the  Alaska  marine                 
  highway  system vessel  replacement  fund to  marine highway                 
  system improvements/overhaul.   That represents half of a $4                 
  million appropriation.   The other half is  from the general                 
  fund.                                                                        
                                                                               
  Secs.  8  and  9 contain  DOTPF  public  facilities language                 
  presented by the administration.   Senator Rieger asked what                 
  the amount in  Sec. 8 (a) is  expected to be.   Nancy Slagle                 
  responded,   "approximately   $1.5  million,"   relating  to                 
  highways.   Senator Rieger  asked if  the amount  represents                 
  matching funds for  federal projects reappropriated to  "any                 
  DOT project."   Ms. Slagle  said it  must be used  to access                 
  federal dollars.                                                             
                                                                               
  Sec. 10 appropriates $100,000  from the general fund  to the                 
  reforestation fund per the Governor's budget.                                
                                                                               
  Sec. 11 contains a list of municipal capital grant funds for                 
  smaller communities.   Co-chairman  Halford reiterated  that                 
  the list represents  communities that have not  yet applied.                 
  As they apply, they are subtracted from this list and placed                 
  on  the list  of actual  capital matching grants  within the                 
  bill.  Communities should not be listed twice.                               
                                                                               
  Sec.  12  reappropriates  $400,000  from the  Mount  Roberts                 
  project, per  the Governor's  budget, but  to the  statewide                 
  communications project rather than university housing.   Ms.                 
  McConnell voiced  the  administration's  position  that  the                 
  funds were appropriated for Juneau  and should remain within                 
  the community.   She stressed that  the use proposed by  the                 
  Governor was identified as high  priority by the university.                 
  It was part of  a package of funding that  covers university                 
  projects at Anchorage, Fairbanks, and Juneau.  Ms. McConnell                 
  advised  of  broad support  statewide,  full support  of the                 
  Governor, full support  of the delegation in  Anchorage, and                 
  full support by  the university  for use of  the funding  as                 
  intended by the  Governor.  She  stressed that Alaska has  a                 
  statewide  university system.    Priorities for  determining                 
  university projects should be followed.  There is clearly  a                 
  need for university housing in Juneau.                                       
                                                                               
  Sec.  13. appropriates  $1,800,000  for  integration of  the                 
  state's  criminal justice  computer  systems, per  a request                 
  from  the  administration.    Co-chairman  Halford  noted  a                 
                                                                               
                                                                               
  question concerning the correct  number.  Annalee  McConnell                 
  explained that  a multi-year project  is involved.   Much of                 
  the tracking  throughout the  system is  now done  manually.                 
  Pieces missing from the proposal consist of need for  $300.0                 
  for  the  public  safety component  for  maintenance  of the                 
  fingerprinting system, $250  for the Dept. of  Law, and $250                 
  for the court system.  That is considerably scaled back from                 
  the original proposal.  Nancy Slagle advised that the amount                 
  of  funding for the Dept. of Corrections at page 6, line 23,                 
  should  be $750.0 rather than  $1,500,000.  The remainder of                 
  the $2.5  million in  federal dollars  shows up  in deferred                 
  maintenance in the back portion of the budget.                               
                                                                               
  Sec.  14  contains four-dam  pool language  and appropriates                 
  $4,000,000  from  the  Southeast energy  fund  to  the power                 
  development   fund.      Co-chairman  Halford   acknowledged                 
  questions surrounding  the language submitted by  the Office                 
  of Budget  and Management  and asked  how the  appropriation                 
  would  work.    Nancy Slagle  referenced  submission  of two                 
  proposals for language.   The first  appropriates $4,000,000                 
  to  the  power development  fund,  $4,000,000 to  power cost                 
  equalization, and $2,000,000 to the power project fund.  The                 
  remainder would be  distributed on  the 40/40/20 basis,  per                 
  statute.  Following  discussion with attorneys and  staff in                 
  Senate Finance co-chairs offices, it was determined it would                 
  be  simpler to  leave  the 40/40/20  language  in the  front                 
  section of the operating bill and appropriate the $4,000,000                 
  from  the  Southeast energy  fund  to the  power development                 
  fund.                                                                        
                                                                               
  SENATOR TAYLOR came  before committee  in opposition to  the                 
  appropriation, terming it "a simpler way to steal $4,000,000                 
  out of my district and put it into a state obligation."   He                 
  remarked that the  state has  failed to  repair power  lines                 
  that  supply Tyee  power  to Wrangell  and Petersburg.   The                 
  state  is  currently  being sued  by  four-dam  pool members                 
  because of that  failure.   Deferred maintenance totals  $35                 
  million for the  Tyee line  and the Terror  Lake project  at                 
  Kodiak.  Senator Taylor attested to a  lack of communication                 
  with the Governor's Office  on the issue and urged  that the                 
  legislature  demand  that  "the  law  that was  passed  that                 
  appropriated these moneys,  three years  ago, be  enforced."                 
  He referenced  earlier comments by the administration asking                 
  that moneys appropriated  to Juneau  be preserved while  the                 
  same  continuity of care  does not extend  to the $4,000,000                 
  appropriated for a  $60 million intertie line.  Ketchikan is                 
  presently burning  diesel to  provide power.   The  city has                 
  been doing so since  September, while there is a  surplus of                 
  power at  Tyee.  The $4,000,000 transfer  recommended by the                 
  administration kills  a $60  million intertie  on which  the                 
  Senator advised he had been working for several years.                       
                                                                               
  Senator Taylor said he had prepared an amendment  to correct                 
  the  problem  and   return  the   moneys  to  the   original                 
                                                                               
                                                                               
  appropriation.  Co-chairman Halford asked that amendments be                 
  held until conclusion of overall review of the bill.                         
                                                                               
  Senator Zharoff asked  if a memorandum of  understanding had                 
  been reached  by four-dam pool  members.  Nancy  Slagle said                 
  that proposed language is based  on negotiations between the                 
  administration and attorneys representing utility companies.                 
  She acknowledged  that the  administration does  not have  a                 
  signed agreement with  all parties at this time,  although a                 
  few have  signed.   It will take  time for city  councils to                 
  meet, vote  on the issue, and  sign.  While that  process is                 
  underway, it is  not complete at  this point.   In light  of                 
  needed  repairs, Senator  Zharoff expressed concern  that an                 
  agreement was not in place.                                                  
                                                                               
  Sec. 15 appropriates $1,000,000 in federal receipts from the                 
  National Marine Fisheries for the Kenai River project                        
                                                                               
  Sec. 16 extends the lapse date on disaster relief funds from                 
  June  30,  1995, to  June  30,  1996.   Co-chairman  Halford                 
  subsequently  advised  that this  language is  duplicated in                 
  Sec. 94                                                                      
                                                                               
  Sec. 17  contains appropriations from  unrestricted mortgage                 
  loan interest payments to AHFC  to accompany new legislation                 
  in the executive budget act which  applies to AHFC.  Senator                 
  Rieger asked  if the  $350,000,000 and  the $50,000,000  set                 
  forth in subsections  (a) and (b) respectively,  are numbers                 
  with which AHFC is comfortable.   Co-chairman Halford voiced                 
  his understanding that the numbers were  provided by AHFC.                   
                                                                               
                                                                               
  Sec. 18 contains  denial of  prior authorization for  runway                 
  extension at Anchorage International Airport.                                
                                                                               
  Sec. 19 appropriates  the balance in the Alaska  Science and                 
  Technology Endowment earnings reserve to the  Alaska Science                 
  and Technology Foundation for grants for FY 96.                              
                                                                               
  Sec.  20 contains  supplemental funding  for salvage  timber                 
  harvests.   Co-chairman  Halford advised that  funding would                 
  generate more revenue than expenditure.                                      
                                                                               
  Sec. 21 reappropriates the balance of funding for Petersburg                 
  Elementary School  code upgrades to Petersburg  city Schools                 
  for the middle school/high school shop addition.                             
                                                                               
  Co-chairman  Halford  advised   that  reappropriations   are                 
  contained in Secs. 21  through 94.  He then  queried members                 
  concerning whether they wished to proceed section by section                 
  or  merely  raise  questions and  discuss  specific  items.                  
  Members chose to discuss specific reappropriations.                          
                                                                               
  Senator Rieger directed attention to Sec. 72, page 19, lines                 
                                                                               
                                                                               
  3-5,  and noted  that the  reappropriation is  made  from an                 
  appropriation enacted  during  1995.    Co-chairman  Halford                 
  advised that the Lake and Peninsula Borough undertook school                 
  projects  without  going  through  the  bond,  debt  service                 
  program.  The reappropriation removes moneys that would have                 
  been used for debt  service for those schools from  the debt                 
  service  allocation.   The  net effect  on the  general fund                 
  should be zero.  The request derived from  Senator Hoffman's                 
  office.                                                                      
                                                                               
  Senator  Rieger next  inquired  concerning the  mechanics of                 
  Sec. 83 at pages  20 and 21.  Co-chairman  Halford explained                 
  that  the  reappropriation was  proposed  by the  Governor's                 
  Office.  Nancy Slagle advised that subsection (a) allows for                 
  unexpended balances  of the  longevity bonus  program to  be                 
  available to the office of public advocacy which is $330,000                 
  short this year.  What cannot be made up from subsection (a)                 
  will be made up  from subsection (b) funding derived  from a                 
  1994   appropriation   for   medical  assistance,   medicaid                 
  facilities, where a lapse is expected.                                       
                                                                               
  Senator  Donley  referenced   Sec.  37   and  said  he   was                 
  responsible  for the  original  appropriation for  Cambridge                 
  Way/Tudor Road  traffic improvements.   He  then voiced  his                 
  understanding that reappropriations were not to occur unless                 
  district  legislators  all  agreed.    Co-chairman   Halford                 
  acknowledged  that  the criteria  was  for House  and Senate                 
  members to get  together.  If that  is not the case  on this                 
  item,   the   "normal   thing  would   be   to   delete  the                 
  reappropriation" for the Campbell Creek Trail.  He suggested                 
  that action  be held in abeyance and  that discussion return                 
  to Sec. 37 at a later time.                                                  
                                                                               
  Following  discussion  of questioned  reappropriation items,                 
  Co-chairman Halford continued  his sectional  review of  the                 
  bill.                                                                        
                                                                               
  Sec. 95 contains a $2,700,000  appropriation for the Shepard                 
  Point road  and response equipment  storage facilities  from                 
  settlement fund moneys.                                                      
                                                                               
  Sec.  96  reflects   a  reappropriation  of  $5,669,400   in                 
  legislative carry forward moneys to DOTPF for nonroutine and                 
  deferred maintenance.                                                        
                                                                               
  Sec. 97 contains an Anchorage Caucus reappropriation for the                 
  Ship Creek redevelopment project.                                            
                                                                               
  Sec. 98  reappropriates funding  from the  high speed  ferry                 
  system to the Alaska Science and Technology Foundation.                      
                                                                               
  Sec.  99 contains  a reappropriation  within Senator  Ellis'                 
  district  from the  Williwaw  Elementary School  district to                 
  Mountain View Elementary School.                                             
                                                                               
                                                                               
  Sec. 100 reflects a reappropriation proposed by the Governor                 
  for the Prince  William Sound  Science Center.   Co-chairman                 
  Halford directed attention  to page 25,  line 23, and  noted                 
  need  to insert  "not  to exceed  $300,000"  after the  word                 
  "appropriation."                                                             
                                                                               
  Secs. 101  through 106 contain  additional reappropriations.                 
  The net effect is zero general funds.                                        
                                                                               
  Senator Zharoff  inquired concerning Sec.  104.  Co-chairman                 
  Halford  noted  that  it   reappropriates  moneys  from  the                 
  legislative  lapse to  the University of  Alaska, Anchorage,                 
  for design and  construction of  campus parking  facilities,                 
  the second  or third  item on  the priority  list.   Senator                 
  Duncan  inquired   concerning  the   rationale  behind   the                 
  appropriation.   Co-chairman Halford advised that  there was                 
  no particular tie between the original appropriation and the                 
  reappropriation   project.     He   referenced   an  earlier                 
  reappropriation   from   legislative   funding    to   DOTPF                 
  maintenance.                                                                 
                                                                               
  Sec. 105 provisions  lapse a  number of old  appropriations.                 
  Senator  Rieger  requested   an  explanation.    Co-chairman                 
  Halford advised that the section was included at the request                 
  of  the Legislative Budget and Audit  Committee.  It relates                 
  to  budgets  prior  to  1990.    JOHN BITNEY,  aide  to  the                 
  Legislative Budget and Audit Committee, explained that early                 
  in the session, the legislative auditor provided legislators                 
  a   computer  listing  of   old  capital  project  balances.                 
  Language   within   Sec.   105   repeals   unobligated   and                 
  unencumbered  general fund  balances  in projects  prior  to                 
  1989.  As of January 23, 1995, the total was $8.8 million in                 
  general funds.  Following  a request by Senator  Donley, Co-                 
  chairman Halford asked that Mr. Bitney make a list of repeal                 
  items available for review.                                                  
                                                                               
  Sec.  106 appropriates  program  receipts from  occupational                 
  licensing fees to the division of occupational licensing for                 
  operating  costs  for FY  96.   Senator  Rieger subsequently                 
  asked if the foregoing provision was standard.  Nancy Slagle                 
  explained that it ensures that  program receipts received on                 
  a biennial basis  can be  used for operational  expenditures                 
  over  a  two-year  period.   According  to  statute, program                 
  receipts from  fees are  intended to  cover board  expenses.                 
  Further   discussion   of   overall  division   expenditures                 
  followed.   Ms. McConnell advised  that OMB would review and                 
  clarify the issue.                                                           
                                                                               
  Sec. 107 appropriates all but $100,000,000 from the earnings                 
  reserve  balance  to the  principal  of the  permanent fund.                 
  Annalee McConnell  commented that  the appropriation  within                 
  Sec. 107 represents  one of  the most important  acts to  be                 
  taken by committee.  She noted that it was transpiring in "a                 
                                                                               
                                                                               
  little less than  four seconds  at five of  midnight."   She                 
  stressed that the action is of  enormous impact to the state                 
  and   should   receive    considerable   attention.      The                 
  administration is opposed to the provision.                                  
                                                                               
  End  :    SFC-95, #71, Side 1                                                
  Begin:    SFC-95, #72, Side 2                                                
                                                                               
  Ms.  McConnell  noted  that  the  above appropriation  would                 
  impact whether a  three-quarter vote or a simple majority is                 
  needed to access  the constitutional budget reserve  when it                 
  was "clearly the intention of the  people that these are the                 
  circumstances under  which a  three-quarter  vote should  be                 
  required."   The issue involves "making major changes in the                 
  reserves policy of the State of Alaska just before the long-                 
  range fiscal planning  commission does  its work."   In  her                 
  concluding  comments  she  termed  the  above  appropriation                 
  "premature and a very unwise move at this point."                            
                                                                               
  Co-chairman Halford advised  that the bill making  the above                 
  appropriation "passed the  Senate quite some time  ago," and                 
  the House version has advanced to  the Rules committee.  The                 
  approach  has  thus  had  several  months of  consideration,                 
  affirmative passage  in one body, and  consideration through                 
  the  committee  structure in  the  other  body.   It  is not                 
  intended to be hidden.                                                       
                                                                               
  Senator Duncan inquired concerning the  amount remaining and                 
  not subject to appropriation in  SB 84.  Co-chairman Halford                 
  voiced  his understanding that  SB 84 retained $250,000,000.                 
  Senator Duncan  voiced concern that the  appropriation would                 
  impact  dividends.   Co-chairman  Halford explained  that  a                 
  review of projections  indicates no impact on  the dividend,                 
  except possibly guaranteeing that they do not decline in the                 
  future because of  legislative spending.   He further  noted                 
  that the effective date in SB 84 was  the last day of FY 95.                 
  The effective date  for Sec. 106 is FY 96.   It would not be                 
  available  to be used in some way  to "get the budget passed                 
  with a simple  majority . . . ."   Senator Duncan questioned                 
  the  impact  on  next year's  budget.    Co-chairman Halford                 
  acknowledged a  constitutional  question.    Senator  Duncan                 
  suggested that while  the arrangement  would not bypass  the                 
  three-quarter vote this  year, it  would, in  effect, do  so                 
  next year.  Co-chairman Halford  acknowledged that anytime a                 
  deposit to savings  is made, the appropriation for  the year                 
  is increased.  It  was not the intent of  the constitutional                 
  budget  reserve  to  keep  deposits   to  principal  of  the                 
  permanent fund  from being  made.   Senator Duncan  stressed                 
  that when the constitutional budget reserve was established,                 
  it  was  not   the  intent   that  the  three-quarter   vote                 
  requirement be bypassed.                                                     
                                                                               
  Sec.  108 appropriates the sum of  $711,150,130 to the Dept.                 
  of Education for  full funding, including the  projected $18                 
                                                                               
                                                                               
  million  increase and  single site  schools, for  the  FY 96                 
  education  budget.    Specific numbers  listed  on  pages 27                 
  through 29  were provided  by the  administration.   Annalee                 
  McConnell  referenced page  27, line 29,  and noted  need to                 
  delete  the word  "trust"  from  general fund/mental  health                 
  funding.  Referencing page 28, line 10, public and nonpublic                 
  pupil  transportation,  Ms.   McConnell  advised  that   the                 
  administration budget  showed  public  transportation  as  a                 
  separate  line  item and  zero  funding for  nonpublic pupil                 
  transportation.     The   amount   listed   in  the   draft,                 
  $32,842,200, is  the public  amount.   The effect  of Senate                 
  funding would  be to  reduce the  amount of  money going  to                 
  public schools  for transportation,  in  order to  transport                 
  students to private schools.                                                 
                                                                               
  Discussion of litigation  relating to school  transportation                 
  followed.     Ms.   McConnell   advised   of  requests   for                 
  transportation to private  schools in addition to  that from                 
  Fairbanks  giving  rise  to  the  litigation.    Co-chairman                 
  Halford  asked how  the  case was  decided.   Ms.  McConnell                 
  explained that Alaska  statutes provide  for private  school                 
  transportation, subject  to appropriation.   The court  case                 
  was not appealed  by the  state.   It ordered  the state  to                 
  provide transportation to students at Monroe.  Ms. McConnell                 
  urged appropriation as two separate items.  In the course of                 
  further  discussion,  Ms.  McConnell  said  that  the  total                 
  potential impact of transporting students to private schools                 
  would be $3 to $6 million. Discussion of regulations setting                 
  policy on the issue followed.                                                
                                                                               
  Nancy Slagle voiced need to include Sec. 108 within Sec. 113                 
  provisions for  a July 1, 1995, effective date.  Co-chairman                 
  Halford concurred that funding in Sec. 108 is intended to be                 
  the education component of the FY 96 budget.                                 
                                                                               
  Sec. 109 contains  a $35,000,000 appropriation from  AHFC to                 
  the   general   fund.     Ms.   McConnell   said   that  the                 
  administration does not  support using  AHFC funds for  non-                 
  housing purposes.  That is the reason the administration put                 
  together  a package  that included  deferred maintenance  at                 
  university  student housing,  housing  for seniors,  pioneer                 
  homes, special needs housing, etc.                                           
                                                                               
  Sec. 110  reflects  "sweep language  of  the  constitutional                 
  budget  reserve . . . ."  It would return money to the power                 
  cost assistant fund,  the science  and technology fund,  the                 
  marine highway system, and the mitigation account of the 470                 
  fund.     Mr.  McConnell  advised  that  the  administration                 
  maintains that this should be done by a three-quarters vote.                 
  Co-chairman Halford concurred in the interpretation.                         
                                                                               
  Sec.  111  relates   to  the   three-quarter  vote  in   the                 
  constitutional budget reserve fund.                                          
                                                                               
                                                                               
  Remaining sections apply effective dates.                                    
                                                                               
  Nancy Slagle noted that a  number of the supplemental  items                 
  requested by the Governor  do not appear in the  draft bill.                 
  She noted  specifically judgments and claims by the Dept. of                 
  Law; settlement  of claims  for the  Toksook Bay  oil spill;                 
  reimbursement for the Alaska Gateway  School District; Dept.                 
  of Fish and Game vendor  compensation; funding for community                 
  jails;   settlement  of  personal   lawsuits  for  Dept.  of                 
  Corrections; Cleary contempt court  fines; University ACCFT,                 
  and miscellaneous stale dated warrants.  Co-chairman Halford                 
  acknowledged  that  the  foregoing were  not  included.   He                 
  advised of  extensive discussion  and  a conscious  decision                 
  regarding Toksook Bay.   There was no conscious decision  on                 
  the remainder of the foregoing  which total approximately $3                 
  million.  While the Senate Majority  would like to solve the                 
  Toksook Bay question, it seeks a solution that includes both                 
  state and school  district liability as well as  some method                 
  of  fixing  the problem  so  this  case does  not  become an                 
  example of a way for communities to sue themselves for their                 
  actions and ultimately require the state to  cover the cost.                 
                                                                               
                                                                               
  Ms. McConnell asked if public  discussion of the Toksook Bay                 
  issue had  occurred.   Co-chairman Halford  advised that  it                 
  had.  Senator Donley  commented on lack of testimony  by the                 
  attorney who handled  the settlement on behalf of  the Dept.                 
  of  Law.    He  said  that  he  subsequently  met  with  the                 
  appropriate  attorneys  and  received   "entirely  different                 
  responses  to the questions."   He advised  he was satisfied                 
  with  those  answers and  had  developed a  positive feeling                 
  toward  the  settlement.   Ms.  McConnell stressed  that the                 
  state has an opportunity to  accept a settlement which would                 
  be  of  extreme advantage.   A  jury  trial could  produce a                 
  significantly higher judgment.   The administration is  well                 
  aware of other  claims.  An interdepartmental task  group is                 
  working on the  issue of bulk fuel spills, liability issues,                 
  etc.  The  intent is  to conduct intensive  work during  the                 
  interim  and  make recommendations  in  January.   She urged                 
  support for  the settlement  and warned  that the  financial                 
  situation would be significantly  worse if the case goes  to                 
  jury trial at Bethel.                                                        
                                                                               
  Citing the Co-chairman's  indication that  non-controversial                 
  supplemental  items  were not  consciously  left out  of the                 
  draft, Ms. McConnell inquired regarding  the process at this                 
  point.  Co-chairman Halford advised that supplementals would                 
  probably be included in a technical amendment offered on the                 
  floor.  Ms.  McConnell suggested that  she make copies of  a                 
  spread  sheet so  members  could review  the  funding.   Co-                 
  chairman  Halford  directed  that  the  meeting be  recessed                 
  pending copying and distribution of the spread sheet.                        
                                                                               
                       RECESS - 12:20 A.M.                                     
                                                                               
                                                                               
                      RECONVENE - 1:05 A.M.                                    
                                                                               
  Co-chairman Frank MOVED for adoption  of SCS CSHB 268  (Fin)                 
  and requested unanimous  consent.  No objection  having been                 
  raised,  SCS  CSHB  268  (Fin)  was  ADOPTED  as  a  working                 
  document.                                                                    
                                                                               
  Co-chairman  Halford  noted that  amendment  of the  bill to                 
  effect both  technical  and other  needed corrections  would                 
  require substantial time and reprinting.  He then voiced his                 
  intent to prepare a technical amendment  to "pick up all the                 
  technical  changes."   He  further  acknowledged that  there                 
  would  likely  be   substantive  amendments  as   well,  and                 
  suggested that  the bill be  reported out of  committee with                 
  the understanding that those amendments  would follow and be                 
  offered  on  the  floor.     He  referenced  circulation  of                 
  information on  supplemental funding  by the  administration                 
  and said  the  committee  would  be  taking  the  advice  of                 
  conference committee  co-chairs on  the operating  budget in                 
  including supplemental funding  in amendments to  be offered                 
  on the floor.                                                                
                                                                               
  In response to a  question from Senator Randy Phillips,  the                 
  Co-chairman advised  that he  would do  his best  to combine                 
  changes  within  a  consent amendment  and  go  forward from                 
  there.      He   urged    members   to   carefully   examine                 
  reappropriation items within their districts for accuracy.                   
                                                                               
  Senator  Rieger MOVED  that  SCS CSHB  268  (Fin) pass  from                 
  committee with individual  recommendations.  Senator Zharoff                 
  OBJECTED, voicing exception to several sections, Sec. 107 in                 
  particular.   He further  spoke to  lack  of opportunity  to                 
  offer amendments in committee and cited questions concerning                 
  funding sources, the  school priority list, water  and sewer                 
  projects, appropriations from  AHFC receipts,  and why  some                 
  projects were included while others were not.                                
                                                                               
  Annalee  McConnell  voiced  concern  regarding  supplemental                 
  housing for AHFC.   She said  that in reducing funding  from                 
  the requested $7 million match, the  state would not be able                 
  to capture the full  $60 million in federal funds.   Capture                 
  of the $60 million  would require addition of $7  million at                 
  page 32, line  22.  Co-chairman  Halford noted that  funding                 
  provided at page 32 is higher  than "the minimum number that                 
  was previously provided  by AHFC."  He  further acknowledged                 
  concern "back and  forth on that  question."  Ms.  McConnell                 
  concurred and  referenced recent  receipt of  correspondence                 
  from HUD clarifying the issue.                                               
                                                                               
  Ms.  McConnell  spoke  to projects  which  were  not  on the                 
  administration's  list such  as  the agricultural  education                 
  demonstration project.  Funding  for Dept. of Transportation                 
  and Public Facilities  remains $2 million short  in deferred                 
  maintenance  funding.  Nancy Slagle advised of need for $1.2                 
                                                                               
                                                                               
  million  for  an  additional  Dept.  of  Health  and  Social                 
  Services project for life, health, safety block grants.                      
                                                                               
  Ms. McConnell  referenced submission of  information on  the                 
  school at Port Protection  where the state can solve  a $1.6                 
  million problem with $100.0, the  cost of moving relocatable                 
  classrooms  in  an  effort   to  avoid  need  for   a  major                 
  construction project.  She further spoke to the situation at                 
  Kalskag  where  the  school  burned   down.    Although  the                 
  community is insured for replacement, it was not insured for                 
  interim classroom space.                                                     
                                                                               
  She next recommended funding of $300.0 for the SLED  project                 
  which makes data resources available to libraries throughout                 
  the  state.   She  stressed the  growing  popularity of  the                 
  project and the fact that it  serves school children as well                 
  as adults.                                                                   
                                                                               
  Ms.  McConnell  urged  that   no  unallocated  general  fund                 
  reduction of $1.5 million be made  to the village safe water                 
  program,  page  55.   She  further  noted that  a  number of                 
  projects  were  missing  from  the  priority  list  for  the                 
  municipal matching  program  and funding  amounts  for  some                 
  projects differ from those submitted  by the communities and                 
  the administration.   She recommended return to  funding per                 
  the priority list.                                                           
                                                                               
  Funding for repairs  and life, safety features  at community                 
  jails is also not included.  The finance committee requested                 
  that this $155.0 item be moved  from the operating budget to                 
  the capital budget.                                                          
                                                                               
  Ms. McConnell also  stressed need  for inclusion of  funding                 
  for completion of the Machatanz  Building at the university,                 
  even  though it was not part  of the package put together by                 
  university regents.                                                          
                                                                               
  Co-chairman Halford called for a show of hands on passage of                 
  the bill.  The motion CARRIED on  a vote of 5 to 2, and  SCS                 
  CSHB 268  (Fin) was REPORTED OUT of  committee.  Co-chairmen                 
  Halford and Frank and  Senators Rieger and Sharp signed  the                 
  committee report with a "do  pass" recommendation.  Senators                 
  Donley, Phillips, and Zharoff signed "no recommendation."                    
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 1:20 a.m.                         
                                                                               

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