Legislature(1997 - 1998)
03/07/1997 09:40 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES{PRIVATE }
SENATE FINANCE COMMITTEE
7 March 1997
9:40 a.m.
TAPES
SFC-97, Tape 50, Sides A and B
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 9:40 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Sharp, Phillips, Donley
and Adams were present when the meeting convened. Senator
Torgerson arrived immediately thereafter.
Fred Fisher, Director, Division of Administrative
ALSO ATTENDING:
Services, Department of Law; Dan Spencer, Budget Analyst, Office
of Management and Budget, Office of the Governor; Remond
Henderson, Director, Division of Administrative Services,
Department of Community and Regional Affairs; Nancy Slagle,
Director, Division of Administrative Services, Department of
Transportation and Public Facilities; Dean Guaneli, Chief
Assistant Attorney General, Legal Services Section, Criminal
Division, Department of Law; Barbara Ritchie, Deputy Attorney
General, Civil Division, Department of Law; Guy Bell, Director,
Division of Administrative Services, Department of Commerce and
Economic Development; Randy Welker, Legislative Auditor, Division
of Legislative Audit; Nico Bus, Chief Financial Officer, Division
of Administrative Services, Department of Military and Veteran's
Affairs; and aides to committee members and other members of the
legislature.
Craig Tillery, Assistant Attorney General,
VIA TELECONFERENCE:
Environmental Section, Civil Division, Department of Law testified
via teleconference from Anchorage.
SUMMARY INFORMATION
SB 83 SUPPLEMENTAL & OTHER APPROPRIATIONS
SB 83 was HEARD and HELD in committee for further
consideration.
FY 97 supplemental requests for the Departments of
Administration, Health and Social Services, Law,
Military and Veterans Affairs, Corrections,
Transportation and Public Facilities, Community and
Regional Affairs, and Commerce and Economic Development
were discussed by the above-listed individuals.
SENATE BILL NO. 83
"An Act making an appropriation for management fees for the
constitutional budget reserve fund (art. IX, sec. 17,
Constitution of the State of Alaska); and providing for an
effective date."
Co-chair Pearce introduced the continued overview of supplemental
requests for FY 97. She pointed to new materials that had come to
the committee, including a February 27 letter with a number of
amendments.
DEPARTMENT OF FISH AND GAME
DAN SPENCER, BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, explained that the supplemental request
for $115,000 would take money lapsed by the Department of Fish and
Game (DFG) that was originally encumbered; the encumbrance was
removed at the request of the legislative auditor. He added that
the money was in the general fund and available, and would be
primarily used to pay the Department of Law (DOL) for costs
arising from defense of a suit against DFG.
FRED FISHER, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF LAW, detailed that DOL had incurred costs for
outside expert witness fees and was hoping for help from DFG in
covering the costs. The supplemental item was the response to the
request on behalf of DOL.
Senator Adams asked whether the reappropriations would cover the
cost of all the on-going litigation. Mr. Fisher responded no; DOL
was absorbing a substantial portion of the costs, and it was not
charging DFG for DOL attorney costs. The item would cover expert
witness fees and some paralegal staff costs.
Senator Sharp verified that the reappropriation was general funds
and related to the Division of Commercial Fisheries.
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS
REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS, addressed the $1.5
million supplemental request for Power Cost Equalization (PCE). He
detailed that the item was a result of increases in fuel prices
and increases in the PCE rate as set by the Alaska Public
Utilities Commission (APUC). The item would allow the program to
continue to be funded at the 85 percent level. The full cost was
estimated at $21.8 million. The current level of funding was $17
million; the $1.5 million request would bring the total to $18.5
million, or 85 percent of the full cost.
Co-chair Pearce queried the percentage increase in fuel prices.
Mr. Henderson replied that the percentage varied depending on the
location of the communities. Some areas experienced increases as
high as 50 percent.
Co-chair Pearce verified that the additional appropriation would
keep the rate at 85 percent for the fiscal year. She queried the
governor's PCE request for the FY 98 budget. Mr. Henderson
answered that the current request was for $17 million. There had
been consideration of requesting an increment, but he believed the
decision had been made not to fund it. He stated that the total
would remain at $17 million.
Co-chair Pearce asked whether the department would be paying at
the 85 percent rate. Mr. Henderson replied that the program would
continue paying at the 85 percent level; the department
anticipated that the increased rates were not permanent. There
would be re-evaluation in the next fiscal year about whether to
ask for a supplemental or to remain at the same level.
Co-chair Pearce queried the effect in the communities if the
legislature did not fund the additional money for PCE. Mr.
Henderson answered that the utilities would either fold or pass
the cost to the consumer. He did not think the utilities could
afford to absorb the increase.
Co-chair Pearce asked when the state would be paying at the 85
percent pro-rationing rate. Mr. Henderson believed the level began
in FY 96, but was not sure.
Co-chair Pearce wondered whether there were delinquencies in
payments to local utilities because of the 85 percent pro-
rationing. Mr. Henderson replied that there had been increases in
rates. He added that other eligible cost considerations went into
the increased rates besides fuel prices; the expansion in growth
as customers and communities grew also caused increases.
Senator Adams noted that the percentage level in the past had been
100 percent. He added that the effect of electric rates could be
obtained from APUC.
Co-chair Pearce asked whether the pro-rationing decision was
driven by a budget decision made by the legislature or by the
administration. Mr. Henderson did not know.
Senator Sharp verified that the appropriation was from the general
fund to the PCE capitalization fund.
Mr. Henderson noted the good news: increases in gas prices also
meant revenue for the state. The discussed item was part of the
bad news, in addition to the supplemental request for the
Department of Transportation and Public Facilities (DOT/PF) for
the marine highway system. Certain programs such as the ferries
and PCE were impacted substantially when gas prices rose. He
pointed out that the net effect to the treasury was obviously
good.
Senator Adams(?) thought it was good that the state could afford
the $1.5 million for PCE.
Senator Sharp queried the balance of the PCE account set up three
years prior. Mr. Henderson answered that the balance at the end of
FY 97 would be $32 million.
Senator Torgerson asked how much of the $1.5 million item was
directly attributed to fuel. Mr. Henderson answered that the
majority of the request was attributed to fuel increases, with a
very small percentage for other costs.
DEPARTMENT OF LAW
Co-chair Pearce noted that the next item was a replacement section
for judgment and claims for DOL. She pointed to backup with a
[judgment] list and asked for new items to be highlighted, noting
a letter dated February 27. Mr. Fisher replied that the new items
were item 14, Eckhart v. SFEC ([Alaska] Commercial Fisheries Entry
Commission) on the general fund list and item 2 on the "Other Fund
Sources" list, Eddy v. Department of Administration Public
Employee Retirement System (PERS). He offered to provide
additional information about any case.
Mr. Spencer (?) added that the first item on the non-general-fund
list was the result of a previous discussion before the committee;
the item was amended. In addition, two of the transmitted
amendments had additional judgments and claims.
Co-chair Pearce asked whether the committee would like more
information on the claims. She queried the Copper River Highway
consent decree. She referred to a March 6 letter regarding the
$44,500 item.
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, explained that
the department was requesting funding to implement the Copper
River Highway consent decree. The agreement was reached related to
Clean Water Act violations and was signed in March 1996. She
referred to specific dates for implementation of certain portions
of the agreement within the consent decree. She stressed that some
of the dates were coming up soon, especially in the area of
planning. In addition, according to the consent decree, if the
department did not meet the timeframes, it became subject to
penalties of $1,000 per day or a return to litigation.
Ms. Slagle detailed that the request included $43,500 for
restoration-plan development; $170,000 for actual restoration of
river banks, including re-vegetation and erosion prevention;
$201,000 for historic issues, including stabilization of buildings
located on the highway; and $30,000 for training, required in the
consent decree because of requirements of the Clean Water Act.
Co-chair Pearce asked whether there had been an appropriation for
part of the item the year prior.
CRAIG TILLERY, ASSISTANT ATTORNEY GENERAL, ENVIRONMENTAL SECTION,
CIVIL DIVISION, DEPARTMENT OF LAW (via teleconference), responded
that $20,000 had been appropriated the year before for the
attorney fees. He noted that several other aspects of the case had
been completed, including some of the public-service
announcements. The current request would represent a second stage
of the two described items that were due by the end of the
construction season. The third phase of funding would be slated
for the next legislative session. He agreed with Ms. Slagle that
the current items had to be completed.
Co-chair Pearce recalled a prior discussion regarding all the
elements of the settlement, including the dollar amounts. She
asked that the preview be made available to the committee, with
phasing and timelines as well. Mr. Tillery responded that he had
the information and would make it available.
Co-chair Pearce mentioned the expected timeline of the
supplemental bill.
Senator Sharp asked whether the requested document would cover all
the phases. Co-chair Pearce agreed. She remembered objecting to
one phase of the project related to giving money to an
environmental group, which was no longer listed. Mr. Tillery
explained that the item had been funded the prior year.
Ms. Slagle noted that the item was a reduction from the previous
year because the department had absorbed some of the costs within
the agency. She referred to public-service announcements.
Co-chair Pearce asked what the announcements communicated. Mr.
Tillery described the video communicating compliance with the law
(testimony largely unintelligible).
Senator Torgerson questioned the language. Mr. Tillery defined
"stabilization" (largely unintelligible). There was a discussion
about what was being planned. Mr. Tillery stated that both the
master plan and stabilization would be covered by the $201,000.
Co-chair Pearce turned attention to the DOL judgments. She asked
for details regarding the Cleary case.
DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION, CRIMINAL DIVISION, DEPARTMENT OF LAW, testified regarding
items 17 to 23. He detailed that the Cleary case was a class-
action lawsuit involving prisoners' rights. There were two
lawsuits: a main lawsuit involves all prisoners in all of the
state's facilities; a separate lawsuit involved women prisoners
and challenged the department's treatment of women as a separate
class. Because of potential conflicts between the two, the court
appointed separate counsel for the women prisoners. Over time,
three law firms had been involved in representing the women
prisoners: Perkins Coie (based in Anchorage), the Northwest
Women's Law Center (based in Seattle), and William Oberly (local
counsel for the Northwest Women's Law Center). He reported that
the primary firm was currently Perkins Coie and that there would
not be so many different firms submitting attorney fees requests.
Mr. Guaneli stressed that "fairly modest amounts" of attorney fees
were being asked for representing a large number of clients. The
law firms had responsibility under the court's order to not only
represent the classes of prisoners they were assigned to
represent, but to receive phone calls from prisoners, investigate
their complaints, and bring justified complaints before the court.
There had been a great deal of work done for roughly 300,000
separate clients. He thought the total amount of around $86,000
for the year was modest given the amount of work.
Mr. Guaneli noted that there had been some success with the case
and that the court had ruled in the clients' favor.
Senator Sharp asked what rights had been violated. Mr. Guaneli
replied that the Cleary lawsuit was mostly about overcrowding in
the state's prisons. He explained that for the main part of the
lawsuit, there was a finding that the state was in contempt of
court for violating population limits (to date, the state had not
paid any of the contempt fines). For the women's suit, the primary
complaint had been that the facilities and programs available to
women were inadequate compared to those available to men. The
women's class of prisoners was the fastest growing class in
Alaska's prisons; although the department tried hard, because
there were little pockets of women in all the facilities, it had
been difficult to provide programs for the women.
Mr. Guaneli explained that the state needed and had been pursuing
a women's facility. The attorneys had been pressing for a women's
facility with rehabilitative services equivalent to those
available to men.
Senator Sharp questioned how much had been approved for attorney
fees the year prior for the Cleary case. Mr. Guaneli replied that
the total amount was approximately $119,000; the amount was down
to $86,000 for the current year.
Senator Donley asked what other project besides the women's
facility was important for the Department of Corrections (DOC).
Mr. Guaneli opined that the primary problem in DOC was
overcrowding, so anything that could impact crowding would be
paramount. He added that DOC was pushing for a women's facility
and believed there was a related $2.3 million supplemental
request.
Co-chair Pearce reported that in the DOC subcommittee, she had
asked what "overcrowding" meant. She believed part of the
definition was related to how the facilities were built. She did
not know what standard the court used when it decided that prisons
were overcrowded. She had asked for details by facility. She
claimed that DOC had not made use of all the opportunities
provided by the legislature in terms of community residential
center (CRC) beds and other options for incarceration,
particularly of less dangerous prisoners. She asked whether DOL
worked with DOC to help it determine how to utilize the facilities
it already had.
Mr. Guaneli believed DOC had been making better use of the CRC
beds over the past years. He explained that DOL received a daily
count sheet from DOC showing how many people were in each facility
and how many were in the halfway-house beds. When DOL noticed that
halfway-house beds were not being filled as much, it discussed the
issue with DOC, including reviewing the criteria used to assign
beds. He added that the legislature had given a fair amount of
additional money to DOC for more halfway-house beds, which have
been created at a quick rate. He opined that DOC felt that its
obligation to public safety meant it had to carefully consider the
criteria used to place prisoners in halfway houses, as the
population represented a slightly greater danger to the public.
Unless DOC was careful, the public backlash created by someone
escaping and committing a crime would force the department to cut
back on the number of halfway-house beds. He believed usage of
halfway-house beds was between 90 and 95 percent of available
beds.
Co-chair Pearce noted that the budget documents available to the
committee did not show 90 to 95 percent usage. She queried the
legal requirement that the state provide programs for incarcerated
prisoners. Mr. Guaneli responded that the Alaska Constitution
contained a requirement that the penal administration be based on
a number of factors, including the principle of reformation. The
requirement had been interpreted by Alaska courts to mean that DOC
must at least make some effort towards rehabilitation, which did
not mean that the department could not impose certain criteria
(such as timing of programs).
BARBARA RITCHIE, DEPUTY ATTORNEY GENERAL, CIVIL DIVISION,
DEPARTMENT OF LAW, provided details regarding item 14 on the list.
She noted that the Eckert case had been covered; for technical
reasons, one item was for attorney fees and one for costs.
Co-chair Pearce pointed out that a response had been made
available to the committee about a question in an earlier meeting
regarding allowing permits while eligibility was being determined.
Senator Sharp thought the letter said that a person could continue
fishing as long as their case was in appeal. Ms. Ritchie replied
that interim-use permits were allowed in Alaska statute as
interpreted by the Alaska Supreme Court. She noted discussion with
Bruce Twomley at the Alaska Commercial Fisheries Entry Commission
(CFEC) about the issue; CFEC issued interim-use permits to an
applicant pending final determination of the application,
including court proceedings.
Ms. Ritchie moved to item 15: attorney fees to be paid regarding a
suit brought against the Lieutenant Governor for the alleged
irregularities in the 1994 gubernatorial election. The lower court
prevailed in summary judgment and the Alaska Supreme Court
reversed in part and remanded. The case was eventually resolved
and resulted in legislation that clarified state law to conform
with federal law related to the issue of voter-incentive programs.
The superior court awarded the amount of attorney fees. The
plaintiffs appealed to the state supreme court, claiming the
amount was too small. They had requested $200,000 in fees and
costs, and the superior court awarded $25,000. She noted that the
plaintiffs were public-interest litigants, about which there had
been questions in a previous committee hearing. She did not think
the plaintiffs would get any less than the amount. She recommended
paying the amount so that additional interest would not accrue.
Co-chair Pearce noted the letter about public-interest litigants.
Ms. Ritchie directed attention to the next case: $18,186 plus
interest for Winter Telecom Inc. v. Alaska Court System for
attorney fees to be paid to Hedlen, Brinnan and Hyderman; James
Brinnan, lawyer for Winter Telecom. The matter arose out of a
dispute for the supply and distribution of a telephone system for
the new court building in Anchorage. The state supreme court
upheld the award to Anchorage Telephone Utility (ATU) but
disapproved of the method used by the court system for making the
award and awarded the protester their actual costs and attorney
fees in bringing their protest against the court system. The court
issued the memorandum of judgment, which did not have precedential
value. The court system challenged the award unsuccessfully.
Ms. Ritchie skipped over the Cleary items. She pointed to the next
case, Richards v. State of Alaska. Sharon and Ronald Richards sued
the state for breach of contract, fraud, and failure to release a
mortgage. They had purchased almost 300 acres of agricultural land
from the state at the Two Rivers auction in 1981. The parcel was
on former Alaska Mental Health Trust Authority (AMHTA) land; in
June of 1990, the Richards made the final payment on the land
under the land-sale contract with the state, and requested patent.
In July 1990, while the state was processing the request, Judge
Green entered a preliminary injunction in the mental health trust
case, precluding the state from issuing the patent to all affected
parcels, including the discussed parcel. The Richards filed suit
for $3 million in August 1993. There was a lot of motion practice
in the case, with the state prevailing on some issues and other
issues left unresolved. A settlement had been reached for nuisance
value. She listed a series of items that would resolve the
litigation, including that the Richards would quit claim to their
interest in the parcel (valued between $65,000 and $75,000).
Remaining debt would be canceled in exchange for the parcel; the
state would relieve the Richards of borough tax obligations, and
pay the Richards $13,000 (the amount in the judgment). She noted
that the most troublesome aspect legally was the breach-of-
contract claim.
[SFC-97, Tape 50, Side B]
Senator Sharp asked whether there were similar cases pending
related to mental health trust lands. Ms. Ritchie replied that the
department had considered the issue; it did not want to open the
door to other similar cases. She noted that the people in the
particular case were litigious.
A senator asked whether the people were right in their claim and
whether they were entitled to the 300 acres. He asked whether the
court ruled against the state on the issue of breach of contract.
Ms. Ritchie replied that DOL did not think there were damages as
large as $3 million. The court rejected the state's argument,
based on the doctrine of temporary impossibility to perform the
contract; the state argued that that should protect the state from
the breach-of-contract claim. The court ruled against the state on
the point, but it also ruled that the burden was on the Richards
to show that the delay in the ability to perform the contract was
unreasonable in light of the contract between the parties. The
Richards would be entitled to rescission of the contract and
restitution if the burden was met through trial. She noted that in
the settlement, the state would get the land back.
Co-chair Pearce noted that Section 8 would be amended with the
Department of Administration and two small appropriations.
Mr. Spencer detailed that the amendments for Section 8 were the
result of additional bills in the legislature. He stated that
Section 11 (additional ratifications) had gone through the
process.
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
Co-chair Pearce directed attention to the March 5 letter and items
for the Department of Commerce and Economic Development (DCED).
GUY BELL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, spoke to the
$60,000 request to cover costs associated with implementing the
response to the Southeast mill closure in October the previous
year. The governor had appointed a group to coordinate the
response and address problems arising because of the mill closure.
The department hired a temporary position in Ketchikan to serve as
the administrative support person and coordinate the response.
Initially, the position was expected to last two to three months,
but turned out to be necessary through the end of the fiscal year.
The supplemental appropriation would help cover the cost of the
position, travel costs for the position, and bringing other people
from other places in Southeast to Ketchikan to provide training.
For example, people from locations in Washington State that had
experienced similar mill closures have been invited to train
Alaskan personnel on procedures and local, state, and federal
coordination. The item would also pay for basic contractual costs
associated with the new temporary office in Ketchikan. Finally,
$15,000 would fund targeted professional-services contracts for
technical assistance, business-plan assistance, and assistance in
getting the required state and federal permits for value-added
projects.
Co-chair Pearce asked whether the special assistant to the
department would spend time on the projects as well as the
community liaison position. Mr. Bell responded that the special
assistant to the department was assigned to be the overall
coordinator for the project because she was familiar with the
community of Ketchikan. He added that she continued to be heavily
involved, and he thought she would continue to be involved through
the fiscal year. The department hoped a more permanent program
would be in place and run by DCED under the name of "CERT." The
effort would be a long-term state and federal partnership to
address the impacts of the mill closure. The special assistant
would then return to her position as special assistant to the
commissioner of DCED.
Co-chair Pearce noted that DOL had requested the deletion of an
encumbrance in Section 6(a). Mr. Fisher detailed that the deletion
request was in response to concerns expressed by the legislature
regarding the potential need of a three-fourth majority vote.
Legislative Legal Services had provided the opinion that the
three-fourths vote could be required because the appropriation was
made from the Constitutional Budget Reserve (CBR). The department
reviewed other options available to the legislature in order to
address the concern. He noted that another concern was compliance
with the legislative auditor's interpretation of encumbrance
rules. He pointed out that there would be a future supplemental
request or ratification appropriation to resolve audit findings
related to the validity of the department's FY 96 oil and gas
litigation encumbrances. Any significant changes in the litigation
schedule or other changes in oil and gas budget requests could
result in the need for supplemental appropriations in FY 98 and
subsequent years. He understood that the auditors were willing to
consider the approach.
Co-chair Pearce stated that she wanted the legislature to take
direction and advice from its own auditor related to the section.
She did not think the need for a three-quarters majority vote
would be an impediment.
RANDY WELKER, LEGISLATIVE AUDITOR, DIVISION OF LEGISLATIVE AUDIT,
explained that there was disagreement between himself and DOL on
whether the original encumbrance was or was not valid when the
money was encumbered at the end of FY 96 to spend in FY 97. He
opined that the encumbrance was not valid; DOL believed it was. He
suggested that if the encumbrance was not valid, the appropriation
would have to be completed, either through the three-quarters vote
or a general fund supplemental. The completion would be technical.
The legislature had the choice of either ignoring the
appropriation, since the money had been spent and would not affect
funds in the general fund or in the CBR as far as cash balances.
He noted that about $1 million remained unexpended on the
encumbrance, but it was expected to be spent by the end of the
fiscal year. He reiterated that the technical completion of the
sequence of events would be to approve an appropriation; whether
to do so or not would be a legislative policy call.
Mr. Welker referred to comments made by DOL about discontinuing
the practice. He preferred to have the commitments in place
regardless of whether the appropriation was withdrawn.
Co-chair Pearce pointed to a request to add to Section 6(3). Mr.
Fisher explained the item related to the Medicaid provider fraud
unit. Based on the casework that the unit was currently
processing, all of the general fund receipts had not been
generated to meet match requirements for FY 97. As a result, the
department was asking for a net-zero transfer of general fund
authority from program to receipts to general fund match. The
other piece associated with the issue was that the department
received a request from the Office of the Inspector General of the
U.S. Department of Health and Human Services strongly suggesting
that now and in the future the state pursue appropriations of
unrestricted general fund match rather than program receipts as a
funding source for the program. He also pointed out that the
federal government's approval of the Medicaid provider fraud unit
was contingent upon ongoing state receipt of Medicaid funds.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
Co-chair Pearce called attention to a last item listed in the
March 5 letter.
Mr. Spencer noted that the proposed amendment was referred to in
the letter dated March 7, 1997 and was a technical amendment
striking a few words. The original amendment specified that
premiums would be paid through the Federal Emergency Management
Agency (FEMA); in fact, the funds would not be paid through FEMA,
but would be paid directly to the insurance program.
NICO BUS, CHIEF FINANCIAL OFFICER, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF MILITARY AND VETERAN'S AFFAIRS, detailed
that the request would allow about 86 residents of the area
impacted by the Southcentral flood to buy a good group insurance
policy for floods. The program was a pilot program allowed by the
federal government and would cost $200 (per resident) for three
years of flood insurance. He noted that he personally paid $50 per
month and believed the program to be a good deal. The 86 people
allowed to participate would receive premiums and then pass them
on.
Co-chair Pearce pointed to the letter received March 7; the first
section would be a new one for the Alaska Aerospace Development
Corporation (AADC), with two subsections, a $5 million grant and
receipt of federal funds.
Mr. Bell explained that the appropriation was initially requested
in the governor's capital budget. He noted that the dollar amount
was the same but the language had changed somewhat. The reason for
the change to a supplemental capital appropriation request was
that AADC had projected beginning construction on the project in
May to take full advantage of the construction season. The $28
million represented the full amount required to construct the
Kodiak launch complex; initial launches were anticipated for the
following summer to fall.
Mr. Bell detailed that the language was written in two sections
because of discussions with DOL. A statute (AS 37.17.090(k))
stipulated that the Alaska Science and Technology Foundation
(ASTF) could make a grant to AADC for the complex, subject to
appropriation. The Department of Law had given the verbal opinion
that there had to be a specific item of appropriation; the
amendment would give that specific appropriation authority. The
second part of the section was the exact language found in the
capital appropriation request for $18 million in federal receipts
from the U.S. Air Force, the expenditure authority for the $5
million grant from the ASTF endowment, and $5 million in
additional corporate receipts representing interest earnings and
other private contributions to the project. He noted that the $5
million in additional corporate receipts was a projected amount.
Co-chair Pearce recalled a press release the day before announcing
the grant at $4.9 million. Regarding the subsection (a) language,
she referred to an ASTF board vote to make the award contingent
upon receipt of the federal $18 million portion. She thought the
supplemental language should match the board's language. Mr. Bell
responded that the issue had been discussed with DOL and the
executive director of ASTF. He explained that the capital
appropriation as currently written would effectively be a direct
appropriation from the ASTF endowment to AADC, without being a
grant. The amendment would require that the item continue to be a
grant and fall under the conditions of the grant as made by the
foundation. The contingent language was implied, indicating that
the item was a grant. He noted that the language requested could
be added as intent language, but stressed that indicating that the
item was a grant would continue the contingency.
Co-chair Pearce wanted it to be clear that the contingency
existed. Mr. Bell added that there was language for the item
making it retroactive to the present fiscal year so that the ASTF
board would not have to go through the process of awarding the
grant again.
Co-chair Pearce moved to the next requested amendments, beginning
with reductions for the Department of Administration (DOA).
Mr. Spencer detailed that the amendments to Section 1 and Section
5 were both based on new projections by DOA and the Department of
Health and Social Services (DHSS). Both were reductions. For DOA,
Section 1(a) would be reduced by $25,000 and Section 1(b) would be
reduced by $69,700.
Co-chair Pearce noted another claim by DOL for $1,200 for a lease
associated with Marty Ferrel (?) (Section 6). She asked for detail
regarding technical corrections.
Mr. Spencer listed technical corrections:
The first technical correction had already been discussed
·
related to the $17.2 for flood insurance.
An additional miscellaneous claim from the Department of
·
Corrections for $945,000.
A Section 13 technical correction (discussed during the
·
supplemental for the Marine Highway System) to appropriate
the funding to the marine highway system fund.
Sections 16 and 18, related to the Kodiak launch complex.
·
Co-chair Pearce referred to the Revised Program-Legislative (RPL).
Mr. Spencer informed the committee that the RPL issue was
unresolved and that it was not clear what the legislature wanted
as ground rules for what was an RPL or supplemental appropriation.
For example, for one of the RPLs for the Department of Education
that had been approved at the last committee meeting, the
department did not have the funds in hand. On the other hand, the
department had the funds in hand for the other federal receipt
RPLs that were not approved or even voted on in committee, but
could not distribute them to the local school districts until
receiving approval or applying the 45-day rule. He did not want to
see good projects die because of timing issues or get delayed
because of money problems. He noted that the backup had been
previously presented to the Legislative Budget and Audit Committee
and to Legislative Finance and could be made available to the
committee.
Co-chair Pearce stated that the RPLs would be discussed at a
future committee meeting. She referred to discussions in the
Legislative Budget and Audit Committee meeting. She thought there
was a question related to the RPLs connected with the 45-day rule;
since the RPLs affected departmental budgets, it was not clear
whether the departments should come before the committee or wait
for the supplemental process in the finance committees. The
Division of Legislative Finance had been asked to make a judgment
regarding the issue, especially related to time-sensitive
projects. She referred to confusions. She noted that the committee
had the back-up material and that the committee would hear the
RPLs like normal supplemental requests. She promised that the
committee would work towards ground rules related to RPLs. She
understood that some items would be more urgent because of timing
issues.
ADJOURNMENT
The meeting was adjourned at 11:00 a.m.
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