Legislature(1997 - 1998)
03/22/1997 10:10 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
SENATE FINANCE COMMITTEE
22 March 1997
10:10 a.m.
TAPES
SFC-97, #67, Side 1, (000 - 587)
Side 2, (587 - 000)
Side 2, (598 - 000)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 10:10 a.m.
PRESENT
In addition to Co-chair Pearce, Senators Phillips, Donley,
Torgerson and Adams were present when the meeting convened.
Co-chair Sharp arrived shortly thereafter and Senator
Parnell was excused.
ALSO ATTENDING: Karen Rehfeld, Director, Education Support
Services, Department of Education; Michael A. Morgan,
Manager, Facilities Section, Education Support Services,
Department of Education; Annalee McConnell, Director, Office
of Management & Budget; Ken Bischoff, Director, Division of
Administrative Services, Department of Public Safety; Robert
Cole, Director, Division of Administrative Services,
Department of Corrections; Keith Kelton, Director, Division
of Facility Construction & Operation, Department of
Environmental Conservation; Kurt Fredriksson, Director,
Division of Spill Prevention & Response, Department of
Environmental Conservation; Jim Hayden, Program Manager,
Storage Tank Program, Division of Spill Prevention &
Response, Department of Environmental Conservation; Traci
Cramer, Administrative Officer, Exxon Valdez Oil Spill
Trustee Council; Susan Taylor, Fiscal Analyst, Division of
Legislative Finance; and aides to committee members and
other members of the legislature.
SUMMARY INFORMATION
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 convened the meeting. She noted that first
on the agenda supplemental and RPL's would be taken up. Any
new items would also be taken up. OMB was also present and
would be going through some priorities of theirs' and three
specific requests from Legislators.
Karen Rehfeld, Director, Education Support Services,
Department of Education was invited to join the committee.
She reviewed Department of Education RPL's and noted the
requests have been included in the FY '98 budget. In FY '96
the concern was with the federal shut down. The division
was very conservative with it's use of federal dollars. It
involved not only cuts to the U.S. Department of Education
but also Rehabilitation Services. It was also noted that
the Mt. Edgecombe boarding school would like to host summer
activities. Program receipts would come from Alaska Arts
Southeast and the Sitka Skipper's Organization. The final
request for general fund program receipts for the State
museum. The entrance fee to the museums was increased last
year from $2 to $3/person. This generated approximately
$80,000.
Senator Donley referred to a particular line item and wanted
to know where the computers were physically located for the
museums. Ms. Rehfeld said it was her understanding that the
intention was to connect the Sheldon Jackson museum with the
State museum in Juneau. They were also intending to
complete a project automating the collections on the
internet. In response to a question from Senator Donley she
said this did not relate to library services.
Co-chair Pearce referred to a 20 March letter from Dan
Spencer with the Department of Law involving two additional
items; Cook vs. Bothelo which was discussed Thursday.
Annalee McConnell, Director, Office of Management and Budget
was invited to join the committee. She felt that perhaps
updated spread sheets would be more informative than each
time submitting a letter. Judgments and claims were brought
forward individually so that the Department did not incur
late payments. Senator Phillips felt there should be a cut
off date and whatever remained be dealt with next year.
Senator Adams suggested the easiest way might be to get the
house bill and then have one big spread sheet.
Ms. McConnell continued regarding contractual obligations
with property owners. There was concern because this item
had not been fully funded. A list of leases was provided to
House Finance with options of prorating payments for the
last couple months of the year, not paying anything on some
leases and etc. She suggested an update of the projections
of the longevity bonus; estimating that there would probably
be a $1.5 million not necessary to fund the longevity bonus
program in FY '97 and it could be done as a delete/add.
That could be done to cover the lease obligation. The
second item was disaster relief. She wanted noted that if
the $585,000 was not part of the FY '97 supplemental it will
need to be added to the budget in FY '98 creating more
pressure there. The third item was increased fuel costs for
the Marine Highway. Nancy Slagle explained the average
price would have to drop to $0.65/gallon if the House
recommendation were to be followed. The average price was
$0.82/gallon and if that trend continued Marine Highway
would still have to absorb because that would result in a
$471,000 increase for the full year in fuel. Marine Highway
was not asking to increase their supplemental; they will
absorb it. However, they have already absorbed $1.7 million
throughout FY '97 and it was getting to a real pressure
point. In talking to Nancy Slagle the recommendation,
about fuel provided the house committee suggesting it could
be reduced to $130,000, was done on a straight-lined
projection. DOT has a much more precise, sophisticated
projection process including actual weeks of service,
mileage and so forth. The next item referred to was the
McLaughlin and Fairbanks Youth Facilities security fences.
She referred to a conversation with Senator Sharp for a less
expensive way to do the Fairbanks security. She will
discuss the matter further with H&SS and advise Senator
Sharp whether a gate instead of a full perimeter fence would
be an acceptable alternative. She did, however, encourage
the committee to include these items due to the pressure on
the '98 budget (where it will have to be moved if it is not
done in the supplemental) and further because they would
like to commence the procurement process as soon as
possible. In response to a comment from Senator Phillips
she said Co-chair Hanley felt this could be funded with a
portion of the '97 AHFC monies that were not already
appropriated. There were $53 million that could have been
appropriated in '97; the Legislature did not fully utilize
that amount and co-chair Hanley left that open as a possible
source. She advised that they had suggested the police
training academy be funded with that source of money.
Senator Donley asked if this was an electronic fence or some
special surveillance system. Ms. McConnell said neither of
the facilities had full fences around them. As Janet Clarke
indicated the facilities were built as an open campus. Now
we are seeing violent offenders put there. Senator Donley
still felt the cost for the fence system was too expensive
at $1.2 million. Senator Torgerson said one would have to
figure out what kind of fence was needed. Ms. McConnell
said she would ask H&SS to provide further information
regarding the cost break down.
She continued on to Alaska Psychiatric Institute RPL. They
would be receiving more in third party payments than
expected and it was necessary to make a funding source
change. The last item was the training academy at Sitka.
They needed a new shooting range and women's dorm. Senator
Phillips asked if other communities used the Academy. Ms.
McConnell indicated that the northern folks were trained in
Anchorage and folks from Southeast and other areas were
trained in Sitka. He further asked if Anchorage Police
Department used the Sitka facility. Ms. McConnell indicated
they did not.
Ken Bischoff, Director, Administrative Services, Department
of Public Safety was invited to join the committee. He said
the Sitka academy trained statewide except Anchorage. The
communities did pay travel and expenses of officers as they
could. Funds also came from the Police Standards Training
fund. However, some municipalities do not have the
resources to meet necessary standards of the Alaska Police
Standards Council. Traditionally there had been some level
of state subsidy to other municipalities. Senator Sharp
asked the percentage of the total operating cost of the
facility that is program receipts from the users. Mr.
Bischoff said he believed the percentage is approximately
one-third.
Senator Donley asked if there was State subsidy for room and
board and Mr. Bischoff acknowledged to some degree they did.
The Senator further inquired if there had ever been any
women recruits turned away from the academy. Mr. Bischoff
indicated there had been. He said there were not enough
spaces to accommodate female recruits.
Senator Phillips asked about training in other States. Mr.
Bischoff said a 12-week training in Alaska cost $5,600,
whereas the same session in the State of Utah cost $2,000.
There was a set of fixed and variable costs. The full
variable cost for instructors to be brought in, turning on
the lights, providing room and board, were typically paid
for through the Police Standards Council or the
municipality. Senator Torgerson asked of the one-third in
program receipts how much was a $10 surcharge. Mr. Bischoff
said the surcharge came from the Police Standards Training
fund.
Senator Donley asked what percentage of all traffic tickets
in alaska come from the Anchorage area. Mr. Bischoff said
approximately 45%. Senator Donley noted all that money went
for subsidizing the academy however Anchorage did not use
the academy.
Co-chair Pearce advised that any further supplemental
requests from committee members or other members it must be
in her office by Monday along with any back-up material. It
would then be made available to all committee members and
she would continue this hearing until next Wednesday, 26
March.
(There was a brief recess to change co-chair.)
SENATE BILL NO. 107
"An Act making and amending capital and other
appropriations and to capitalize funds; and providing
for an effective date."
Co-chair Sharp reconvened the meeting at 10:50 a.m. on SB
107. He said he would allow questions from the members upon
completion of each project rather than each department.
Annalee McConnell was invited to join the committee. She
referred to section 10, Department of Community and Regional
Affairs. They requested the balance in the rural
electrification revolving loan fund be appropriated to DC&RA
for electrical emergencies programs. There had been some
serious situations where in the middle of winter power
systems were going down and this fund would allow the
department to deal with these emergencies. It would not
require new funds but appropriate the lapse over.
Bob Cole, Director, Administrative Services, Department of
Corrections was invited to joint the committee. He noted in
answer to a previous question that the Department of
Corrections did share it's Anchorage Training Academy with
the Anchorage Police Department and the cost sharing
arrangement is the Department of Corrections pays about
$75,000/year and they in turn contribute several hundred
thousand dollars. The local police department, State
Department of Corrections, Federal Probation and Parole
Officers, military police and those from local communities
in the Western and Interior of Alaska use the facility.
With respect to the capital budget he referred to a request
for $900,000 for deferred maintenance, renewal, replacement,
renovation and repairs. He noted the department had over
112 buildings, a majority of them over 20 years old. He
reviewed quickly a list or priorities saying that these
facilities were used 365 days a year. Most of them are
overcrowded. In response to Senator Phillips he said they
were looking forward to deferred maintenance during the
interim. Senator Phillips further asked how old the oldest
facility in Alaska was. Mr. Cole indicated that it was
probably Wildwood, which had been purchased from the
military in the mid-70's having been built in the 1950's.
Mr. Cole said he would provide requested information on age
and conditions of buildings for Senator Phillips.
Mr. Cole continued on to the next request which was $2.383
million to use federal crime bill money under the violent
offender incarceration incentive grant already awarded. He
noted there was no agreement on how to solve Correction's
overcrowding problems nor was there policy agreement on how
to use the funds. The basic purpose of the funds was to
create a new capacity for the confinement of violent
offenders. A proposal of $500,000 to build 20 new beds at
Pt. McKenzie would alleviate some overcrowding in some of
the Anchorage facilities. It was also proposed to add 25
new beds to the FY '98 Arizona out-of-state contract. The
department proposed to put about 20 more people out this
year, build the FY '98 operating general fund budget so that
the continuation of the cost for those 20 people would be
financed out of general fund money; then 1 July send about
25 more people out and pay for them out of the Federal Crime
Bill funds. It was also proposed to use $400,000 to help
reconstruct the Harborview facility in Valdez for a
substance abuse center. OMB would be coordinating the
project.
(Tape SFC-97 #67 switch to side 2 at log #587.)
Mr. Cole referred to the Palmer project which included last
year in the general obligation bond plan it was proposed to
add 176 new beds at Palmer Correctional Center. About 324
acres would need to be refenced for a total cost of $2.5
million to house a greater number of medium security
prisoners.
Co-chair Sharp recalled that last year it was decided to get
rid of Harborview and quit pumping money into it.
Annalee McConnell responded stating that Harborview was
being phased out as a facility for the disabled which would
be completed by the end of December this year or early
January. However, as it was looked at to get additional bed
space with relatively small capital investment Harborview
was a good facility for the purposes of drug and alcohol
treatment program. Drug and alcohol offenders account for
the large rate of recidivism and there is no treatment
facility as part of the Corrections program. They are
trying to cooperate with the City of Valdez to get a package
deal. In this way the facility would be used for a need in
the State and it would also be a cost effective way of
getting extra beds. Co-chair Sharp asked what the
anticipated annual operating cost would be. Ms. McConnell
said that they were working with the City of Valdez
presently and waiting final confirmation of the shares to be
absorbed by them.
Mr. Cole said the next item was a continuation of use of
federal funds to support the staff that manage the
department's network with respect to criminal aliens. These
are criminal alien funds that Departments of Corrections
throughout the country are paid by the federal government
for housing criminal aliens picked up by the INS. Our
estimated share is $303,000 and the department would like to
continue support for the network technicians. The next
request was for $300,000 for equipment replacement. The
department has approximately $16,500 state-owned equipment.
The department basically operates thirteen mini-cities and
thirteen secured mental health programs. He noted
specifically the range of equipment necessary to operate
these facilities around the State. Senator Phillips asked
if there was a direct purchase of the equipment or if some
was leased or contracted. Mr. Cole said some was
lease/purchase and others were purchased outright.
Mr. Cole referred to the last item on the request and said
it was for this coming fiscal year, $600,000 to continue the
process of cooperating with Law, Courts and Public Safety in
building a new management information system for the
department. The department has been automated, has the
technical backbone for a new information system to ride on.
He referred to a report done in 1990 by Pete Marwick,
interim reports by Legislative Finance and reports done by
the judicial council which basically conclude the Department
of Corrections cannot be managed nor can it properly respond
to its authorizing environment without automation and a
brand new information system. There are funds left in the
capital budget, appropriated by the finance committees over
the past year in the amount of $1.6 million and is being
used for the new design of a new management information
system. He noted this was a complex problem and related
unfortunate incidents with the present CJIS. He said the
persons involved would be prosecuted according to law and
personnel rules. Co-chair Sharp asked if development of
this system was contractual for programming, was there
hardware involved, personnel for programming or what was the
majority of the request for. Mr. Cole indicated said the
majority of the funds would be used for the purchase of
consulting services to either buy or build software
applications.
Co-chair Sharp continued on to the Department of Education.
Karen Rehfeld, Director, Education Support Services,
Department of Education was invited to join the committee.
She further introduced Michael A. Morgan, Manager,
Facilities Section, Education Support Services, Department
of Education. She briefly reviewed the projects included in
the Governor's capital budget for the department. The first
project was Village Safe Water grants, a reappropriation
request. This would be in conjunction with the school
districts to develope spill prevention control and counter
measures plan in event of an oil spill. These plans are
required by the U.S. Environmental Protection Agency and the
U.S. Coast Guard relating to oil spills and protection of
navigable waterways. The schools, at their own expense,
would develope the plan specific to their location.
Estimated cost of the project was $25,000.
The next project was $250,000 for the Alaska Vocational and
Technical Center in Seward. It has been there for some time
and roof repairs are needed for the student services and
food services facilities. This would be an AHFC receipt
funding source.
The Alaska Commission on Post Secondary Education was the
next request. This was for computer replacement in the
amount of $90,000. The agency has converted to a new data
processing system which replaces most of the highly manual
administrative processes. This will allow for improved
delivery of services to their clients. Senator Phillips
asked how much money was spent so far for the computer
upgrade during the last three - four years. Ms. Rehfeld
said the capital request for the entire development of the
new system was a little over $1 million. That conversion
has been completed.
Co-chair Sharp referred to the next request for vocational
and rehabilitational modifications. Ms. Rehfeld said this
was a request for $150,000 and it would also be AHFC
receipt. This would provide funds to allow home
modifications for individuals with disabilities to make
their home environment safer and allow them to remain
independent. Most of the modifications are very
inexpensive. These would be provided as grants to non-
profit organizations that help provide independent living
services throughout the State. She said this was a new
funding source. Funding had been requested last year but
they were not successful in receiving any money in the
Governor's capital budget. Service providers that currently
deal with independent living services statewide would be
used.
Ms. McConnell pointed out that this was one of the ways of
reducing the overall costs of providing services. Many of
these folks might need just a ramp in their home; otherwise
would necessitate them being placed in an institution at a
much higher cost to the State. The Mental Health Trust
Authority has worked on as part of its program to reduce
costs and improve the services so individuals may remain in
their homes instead of institutions. Ms. Rehfeld said this
would be an enhancement to services. In response to a
question from Senator Torgerson she advised that vocational
rehabilitation was under Department of Education and not the
Department of Health and Social Services. Co-chair Sharp in
discussion with Senator Torgerson said this was only a new
program to the Department of Education and there were also
federal funds available for this program.
Ms. Rehfeld continued on to Mt. Edgecombe High School
repairs, renovations and equipment. $50,000 of the request
is general funds; $250,000 is AHFC receipts. She noted that
bathrooms, shower rooms, window replacements were just a few
of the repairs needed as the facility at Mt. Edgecombe was
quite old. Carpeting and furniture needed to be replaced in
the two older dorms. Equipment in the food service area
needed replacing as it is now also over 30 years old.
Senator Phillips asked how different school districts were
put on the list for repairs as he had two schools in his
district in the same condition as Mt. Edgecombe. Ms.
Rehfeld noted that Mt. Edgecombe High School was a state
agency and was not eligible for the "1411" process. Because
of this the Department of Education puts together requests
for Mt. Edgcombe and AVTECH and includes them every year.
Annually the capital project requests are gone through and
review ranking and developing for the school construction
list and the major maintenance list. Co-chair Sharp noted
that the school systems send in their data on what is
needed, they are rated by the department according to health
and safety, however, if a school does not submit a request
they do not get rated.
The next project referred to was the Statewide Library
Electronic Doorway, aka SLED for $100,000 in general funds.
Co-chair Sharp asked if the department got any of their
operating costs covered under the grants and Ms. Rehfeld
informed the committee that the majority of the SLED funds
were passed through to the University of Alaska Fairbanks
and for the telecommunications costs providing Internet
access statewide including approximately 43 communities.
Ms. Rehfeld introduced the next project which was the
Regional Vocational Charter School, $250,000, AIDEA funding,
to be used for a dormitory facility, student/house parent
residences including ceilings, heating system, carpeting and
replacement of doors and other renovation of rooms for the
student/house parent living quarters. She noted the
building was an old air force facility. In response to
Senator Donley she said the Regional Vocational Charter
School was a school operated by the Galena School District
called "Project Education". It provided a technical school
training facility outside the regular school district
program. Co-chair Sharp asked how the operating part was
funded. Ms. McConnell responded saying this was a
cooperation among several school districts to provide
vocational training, including a heavy emphasis on computer
technology. It functions much like Mt. Edgecombe, drawing
students from around the State. It worked on special kinds
of job training that would be a part of welfare reform.
They are looking forward to receiving federal grants and
also innovative partnerships with industry groups looking to
train students for specific kinds of jobs. Senator Donley
wanted to know if any of the money was being used for
computers. Ms. Rehfeld said she did not think any of the
money would be used for computers; the request was for
renovation. Ms. McConnell further advised that monies
through federal grants and the industrial groups would be
used for equipment needed for training in the computer area.
Senator Torgerson asked how many students could be enrolled
and were these high school age students. Ms. Rehfeld
indicated they were high school students but does not have
the exact count. She further said "Project Education" was a
charter school approved by the State Board last fall.
Co-chair Sharp asked about the $85,000 to be used for "house
parents" and if that was like dorm supervisors. Ms. Rehfeld
said it was the same as a live-in dorm advisor.
Ms. Rehfeld introduced the next project which was the Juneau
School District, Mendenhall River School. Senator Phillips
indicated he had a problem with this system.
Michael A. Morgan, Manager, Facilities Section, Education
Support Services, Department of Education was invited to
join the committee. In response to Senator Phillips he said
all appeal hearings were held in Anchorage. Senator
Phillips asked how old the Mendenhall River School was and
Mr. Morgan advised it was about 12 years old. He said there
were design problems with the roof and it was essentially
failing. The contractor and roof manufacturer were out of
business and the architect was no longer in state. Senator
Phillips further reiterated that he had a problem with the
way this system was working and referred to the list of
projects. Mr. Morgan said that when the projects were
ranked they did not know how they would come up. They are
written independently. Senator Donley said they wrote up
the criteria and it was very manipulative for years. Mr.
Morgan said the criteria was fairly new within the last
three years based on statute and developed by a committee of
members from around the state. The criteria was not
developed within the department. Senator Phillips referred
to Creek Side Elementary School which was built in the late
1950's. There are two telephones in the building; one to
call Eagle River and the other for long distance.
Senator Donley said he regretted having done HB 37 and that
it was a gigantic mistake. The legislative constitutional
duties were turned over to the Department of Education to
develope criteria that stacked the deck against her own
schools. Hundreds of thousands of dollars were funded for
schools other than the urban ones because they were further
down the list and it had been assured that these schools
would then move up the list. He said HB 37 should be
repealed.
Ms. McConnell said there could well be some improvements
made to the system, however, she pointed out that urban
schools also benefited from the reimbursement process. A
list could be provided of what had been given to the urban
schools over the past several years. Ms. Rehfeld also
noted that the current process the department is tasked to
follow passed in 1994, SB 7 which replaced the HB 37
process. Great improvements have been made to the
evaluation process. Senator Phillips asked what percentage
of urban Alaskans are on the bond review committee. Mr.
Morgan indicated there were nine members; six or seven of
them being from Anchorage or Fairbanks.
Ms. Rehfeld said the next item on the list was the Fairbanks
School District, Hunter School for planning, design and
renovation/addition in the amount of $2,012,900. This
included correction of fire code deficiencies, replacing the
gym, providing handicapped access and upgrading the
mechanical and electrical systems. The third project on the
major maintenance list was the North Slope School District,
bulk fuel systems upgrade. This was a portion of a borough
wide upgrade of existing bulk fuel storage facilities.
Senator Phillips asked if this could not have been afforded
within their own budget. Mr. Morgan explained the reason
some projects end up on this list was because they were
eligible to apply and districts have a three year window in
which to actually ask for reimbursement even if they have
totally paid for the project. The North Slope has done
almost all of the work by now, if not all, and they would
have paid for it, but due to the window option available by
statute, they have the opportunity to ask for state aid.
Senator Sharp wanted to know how bulk fuel storage could get
so high up on the list as a critical education factor. Ms.
McConnell said that a school could not be operated if there
was no heating system and the heating system required bulk
fuel.
(change to tape number 68, Side 1 at 11:50 a.m.)
Mr. Morgan continued noting that these included total
renovations where tanks were replaced, all piping was
replaced, bermming was put in place, liners on the bermming
and then the monitoring equipment now required for those
facilities was also installed.
Ms. Rehfeld continued to the next project, the Bering Strait
School District, Diomede structural remediation phase II and
III. That was in the amount of $336,720 to correct critical
structural and foundation failures. It involved mainly the
elementary school and a very small portion of the high
school. The next project was the Fairbanks School District,
Denali School, planning, design and renovation/addition in
the amount of $261,508 which would correct a number of
structural, building code, site and program deficiencies.
Co-chair Sharp noted for the record that the Hunter School
and Denali School were the first two schools built in
Fairbanks that expanded the one school town. Mr. Morgan
noted the school were both in excess of thirty years old.
Ms. Rehfeld said the last project for the department was the
Northwest Arctic School District, Kiana High School
renovation in the amount of $2,296,414. This was an old BIA
facility and the funding will provide for redesigning the
educational space and expanding it to meet the needs of the
community. She did not have the number of students
attending the facility but indicated she would provide that
information.
Senator Phillips again reiterated his frustration with this
system. He felt as the years went on the ability to educate
children was diminishing. Ms. Rehfeld offered Mr. Morgan
could walk through the Anchorage school district projects or
perhaps a separate meeting could be set up to discuss the
matter. He expressed his concern over spending more money
on a 12-year old school just because it was in the capital
city.
Co-chair Sharp and members discussed continuing through
Environmental Conservation.
Keith Kelton, Director, Division of Facility Construction
and Operation, Department of Environmental Conservation was
invited to join the committee. He noted there were three
general funding columns: first, an EPA funding source
available for rural waste water projects; second, an EPA
funding source, federal, available for drinking water
projects; and third, a funding source identified as state
general funds. The accumulated total of those three columns
by project source represents approximately $16.5 million.
He explained a complex funding relationship using a chart.
August of last year Congress passed reauthorization of safe
drinking water act. This was the first time federal funds
were made available for safe drinking water projects. This
program, called the state revolving loan program, mirrors a
program in place for waste water for several years. The
state share of the federal appropriation that goes with the
reauthorization was nearly $27 million which required a 20%
state match. This bill would also provide the state
authority to take up to 30% of the federal capitalization as
grants. He referred to the EPA drinking water funding
source. (see the Budget Analysis chart) He noted thirty
percent of the federal cap, representing a little over $8
million, was available for direct grants not requiring a
match by the federal government for drinking water projects.
He said there were ten projects identified just under $8
million. After the grants were subtracted out there was
still $24,363 million available for various set asides as
required by the federal act plus loans. The department
projected available loans in the amount of $20 million which
could go on a revolving basis to different communities to
continue the process. In summary, for $5 million,
identified in section 2, front end of the budget, $8 million
in federal grants could be gotten and another $24 million in
loans and set aside dollars. In comparing this request with
last year's, it was noted the priority under the general
fund accumulative total was $7.5 million. Co-chair Sharp
referred to the federal grants and loan programs. Mr.
Kelton explained these for the committee using his chart.
Ms. McConnell noted that in the front section general funds
were changed in their amendments to AHFC. In the original
version of the bill sent they still did not have
confirmation as to whether the AHFC bond insurance could be
used, which they had believed could be liquidated. The
general fund in section 2, however, is now proposed to be
AHFC corporate receipts and that was defined in their
amendment letter. Co-chair Sharp asked if the AHFC capital
budget did not have $14 million. Ms. McConnell said the
original amount in the capital budget included $53 million
of AHFC. Subsequent to the release of the capital budget
the department learned they would be able to liquidate the
bond insurance fund which would free up another $28 million.
They proposed using $5.3 million of that to replace the GF.
They could not announce it until now because they just
received final confirmation.
Co-chair Sharp asked the definition of a "disadvantaged
community".
Mr. Kelton explained that any community under 10,000
population qualifies under "disadvantaged community". Two
other criteria which only one has to be met are: first,
community's cost of providing the user fees for a utility
service exceed 1% of the per capita income; second, a major
economic set back in the community. Presently Anchorage,
Fairbanks and Juneau were excluded. Ketchikan may be
included as a "disadvantaged community". Senator Torgerson
asked about a previous ranking system. Mr. Kelton said
there still is a ranking system. All projects were
submitted to the State in response to a questionnaire sent
out on an annual basis, based on environmental needs, health
needs, ability of the community to proceed with the project
and provide the match and timing of the project in relation
to other projects that are being built that may have funding
related. Senator Torgerson asked if all the projects were
being matched and Mr. Kelton said that all the communities
were required to provide a match for the requested projects.
One exception he noted was Yakutat, for the waste water
treatment plant, had already provided their match. Senator
Torgerson asked about "disadvantaged communities". Mr.
Kelton indicated they must provide a match. Senator
Torgerson said he would like to see the matches. In a last
comment he said he would like to see "disadvantaged
communities" be changed. Mr. Kelton said this was a
federally defined term. The State was free to interpret
this term. Mr. Kelton said through public process the
public was being encouraged to make comment on the
definition as well as the communities that were being
selected.
Co-chair Sharp referred to the first program being talked
about was the municipal matching grant on the priority list
for a total of $1.150 million EPA funds; $7.821 EPA drinking
water funds; and $7.576 general funds. Mr. Kelton advised
these were all grants. The loan program was identified as a
funding source. Recipients of those loans will be
identified in the intended use plan out for public hearing,
depending on the projects that come in. Co-chair Sharp
asked for an explanation in the difference in qualifying for
this program and the village safe water program. Mr. Kelton
said there were no projects on this list and also on the
village safe water program even though there were
communities eligible to be funded on both lists. He
further referred to section 1 of the loan program of the
capital budget stating this was operated to fund waste water
treatment plants. The fund currently has about $80 million
and about $60 million has been loaned. The remaining corpus
of that account was being used as a collateral for revenue
bond sales. In response to co-chair Sharp he further said
there was a request for a portion of the federal receipts of
the clean water fund that appear both in the operating
budget and in the capital budget. This year the federal
government provided a little over $13 million, a federal
capped grant, to the State of Alaska. It was his
understanding to keep the budget the same as last year a
portion of it was shown in the operating budget and the
balance was in the capital budget.
Ms. McConnell advised the committee that when the budget was
prepared they knew the new federal money was most likely
going to be available but they wanted to reserve judgement
about whether the water-sewer-land fill component of the
budget would be expanded. Therefore, the prior year level's
amount was put in the operating budget in order to get the
federal match.
Co-chair Sharp asked if the current anticipated federal
funding of $13 million less $5.7 million was in the
operating budget. Mr. Kelton advised $13 million was in the
Alaska clean water fund, split between the capital and the
operating budgets. In addition, there was $5 million for
the drinking water which is only in the capital budget. Co-
chair Sharp asked what the funds were used for in the
operating budget. Mr. Kelton said they were loans for waste
water treatment facilities in the larger urban communities.
Last year there was a bill that allowed revenue bonds to be
sold for the same program. Funds generated by this match
would allow expansion the corpus of that fund and increase
the ability to leverage the funds by selling the revenue
bonds.
Co-chair Sharp asked Mr. Kelton to continue on to section 2.
Mr. Kelton said that it was tied into his presentation from
the charts, found also in the back-up. He concluded
explaining the process for the municipal matching grants and
loan projects. He referred to the priority list found in
the packet as opposed to the short forms. He said it would
show the relationship of the matching funds between state
and federal. This program was designed to aid the smaller
communities in the state, primarily rural communities, even
though there are some communities such as Whittier and
other second class cities that do participate in this
program. Basically, it was designed to aid smaller
communities with under 600 population. The funding mainly
had been obtained in large part from federal appropriations
over the last three years and that was in response to SJR 25
that was passed in 1993. That resolution challenged the
Federal government through agencies and Senator Stevens to
fund up to $25 million per year to be used to support rural
sanitation efforts under the condition the state would
provide dollar for dollar match. He reviewed page 2 of the
village safe water CIP priority list noting the total for
the program would be approximately $43.7 million. $7.5
million shown for the rural development administration was
not totalled in the short form package because those funds
were not received and expended by the State. In order for
the projects to be funded by the federal government a match
is required. He explained the eligibility difference
between the federal funding sources. EPA funding could only
be used to fund water and waste water projects. Solid waste
projects had to be funded under rural development
administration funding source. A further limitation under
rural development administration was that there could be no
per family average income that exceeded $42,000 per year.
He explained the land fill project in Denali had too high a
per capita income, was not eligible for EPA funding and
therefore was funded under GF. All other projects had a
dollar for dollar match. Senator Donley asked if there were
some matching federal funds for the first section and then
after that AHFC funds. Mr. Kelton advised that AHFC would
start funding projects at about Kotlik. This would be
partial State GF and partial AHFC funding. He referred to
the village safe water CIP priority list, noting that any
project after Kotlik was proposed for funding from AHFC.
Senator Donley referred to Akiak Native Community and said
there were no longer any federal funds showing up. Mr.
Kelton responded that the remainder were submitted but not
proposed for state funding. Ms. McConnell said the full
list was always submitted and then it was shown to the
legislature how far they could go with what was proposed in
the budget. The whole list was submitted as an information
piece. Co-chair Sharp asked if there was any way to
indicate the population of the last census on the list and
Mr. Kelton said he could provide that information. He said
back-up provided earlier would show that information.
Senator Donley referred to the Denali Regional Land Fill,
the only one that does not have any federal matching funds.
If it did not qualify for matching federal funds why was it
listed. Mr. Kelton said the program did not have any
limitations statutorily on the source of the funding
provided. Many projects in the last four or five years had
this level of federal participation. Senator Donley asked
the Denali project be described. Mr. Kelton said it was in
Senator Miller's district at Clear Air Force Base in the
Cantwell area. It was a regional land fill that would be
put in at part of the Usibelli Coal Mine property. Since it
was a village safe water project there would be little local
participation. Information would be in the back-up book.
Senator Torgerson asked if they would be accepting garbage
from Nenana. Mr. Kelton said that Nenana had proposed a
regional land fill but have since dropped that proposal, now
proposing to pay for the use of the Denali land fill. In
response to co-chair Sharp he said that a dollar for dollar
match was required. Federal regulations establish the
eligibility requirements. Co-chair Sharp commented on the
match requirements and Mr. Kelton explained that the CIP
project administration request which serves as a funding
source for the operating budget at $1.139 million was a fund
source for the operating budget. No administrative costs
would be taken from the projects. At the request of the
Legislature it has always been identified up front. The
other item not having a match was an EPA demonstration
project funded through the Alaska Native Health Board. For
the Health Board to receive EPA monies EPA has dictated to
the State there would be a $500,000 match requirement.
(Tape #68 switched to side 2 at log # 598)
Mr. Kelton continued saying federal totals were not included
in the cumulative total. Co-chair Sharp asked if it was a
requirement of the studies of the developmental costs to be
50/50 funded and Mr. Kelton indicated that was correct. In
response to a question from Co-chair Sharp he said there was
very little local participation for village safe water
program. Some monies were put in through the Governor's
matching grants program, some materials and equipment are
provided, but primary financing was through the above
process. Senator Donley asked if there was a statutory
provision regarding this and Mr. Kelton said the statute
limited the State asking for participation. The communities
are not required to put anything in, but most of them do
provide some in kind support. Senator Donley stated that
he did think the statute said they were prohibited for
asking for any contribution.
Co-chair Sharp asked if it was known how many of the water
systems were the second or third systems installed in
particular locations. Mr. Kelton indicated he did not know
off hand. The normal evolution of the programs in rural
Alaska begins with a simple watering point, then a central
washateria; ultimately two or three years down the road,
there may be a pipe distribution system installed. The
water system would be developed only once, but the
distribution system would expand over a period of ten or
twelve years. Co-chair Sharp explained a tour he took five
years ago through Northwest Alaska. He said some of the
villages were on their second or third water systems in the
last fifteen years. In particular, one village had
abandoned two of their systems due to freeze-ups, break-ups,
etc. He wanted to know how many of these were replacement
systems due to lack of maintenance, technicians to maintain
circulating systems or improper design. Mr. Kelton
responded that he would not want to minimize the projects in
rural Alaska, however improvements had been made through a
remote maintenance manager. During the last eight years
there had been no failure of a system that required it to be
rebuilt due to either poor operation or freeze-ups. Co-
chair Sharp also referred to Birch Creek, noting many times
systems had been shipped in but always disappeared before
they could be made functional. Mr. Kelton said in reference
to Birch Creek that it was a public health service project.
There had been a lead base solder used in some of the piping
that caused a health hazard. It was discovered by a school
teacher and without any village authorization dismantled the
system. That did require it to be rebuilt. Ms. McConnell
said the department had been trying to upgrade operations
and maintenance of all utilities.
(There was a short pause on record.)
Kurt Fredriksson, Director, Spill Prevention and Response,
Department of Environmental Conservation was invited to join
the committee. He said the next eight projects in the bill
were his concern. He referred to page 13, line 20 and
briefly described each. Statewide Hazardous Material
Response was a new capital request, however a project that
had been being worked on for a number of years under State
statute. His division was specifically directed to respond
to the release of hazardous substances. High population
areas were of major concern; Anchorage, Fairbanks and the
North Slope. The primary chemicals of concern were ammonia
and chlorine, associated with most of the seafood
processors; drinking water facilities and sewage treatment
plants. He referred to several chemical releases, the most
recent being a freon release at Diamond Center. They were
extremely hazardous releases and require a response
capability even above that for an oil spill. These
individuals must be highly trained and equipped with
personal protective gear. There was no federal capability
within the State for what was termed a level "A" or "B"
"haz-mat" response capability. Clear Air Force Base does
have some individuals trained, but not to any specific
degree to be able to come to the aid of a local community.
The State also had no level "a" or "B" "haz-mat" response
capability. He further noted a poor response capability
within the Anchorage and Fairbanks fire departments. There
was some response capability in the industry section, i.e.
Unical, in Kenai. They have proposed training and equipment
assistance at least for Anchorage and Fairbanks fire
departments. The teams could go to the aid of other
communities. Co-chair Sharp asked about supplementary
response agreements or drafts with Anchorage and Fairbanks.
Mr. Fredriksson indicated that the agreements in place with
Fairbanks, which had been signed by the borough Mayor.
There was an agreement with Anchorage in the process.
Potential capability had previously been coordinated with
the Ketchikan Pulp Mill. However, that capability eroded
with the closing down of the mill. Southeast Alaska is not
a high risk area and primarily most are diffused risks,
those associated with canneries, seafood processing
facilities. They would ask the teams to come and visit with
southeast Alaska in order to develop a more defensive
posture, protection in place, and how to secure local
residents so they minimize the exposure risk. Senator
Donley asked about the fund source. Mr. Fredriksson
indicated the prevention account of the response fund under
the 470 fund. The response account, once it reaches the $50
million cap that it has, then the $0.02 surcharge stops.
The next item was a request to purchase equipment for the
state chemical lab in Juneau. This was to purchase an
"inductively coupled plasma mass specto-photo meter" or
ICPMS for short. The specific piece of equipment could
provide analysis for trace metals within soils, water and
tissues. The equipment presently in place in the lab was a
spectro-photo meter. It was purchased in 1970 and is no
longer operable. The equipment would primarily be used for
the drinking water program; to assess lead, mercury and
cadmium within drinking water samples. As well, it can test
soils and tissue samples. The next items briefly discussed
were Consolidated Upgrade or Closure and Replacement of
State-Owned Underground Storage Tanks and the Trans-Alaska
Pipeline Corridor Communications System. This system was
built due to Exxon Valdez disaster with repeater systems in
Prince William Sound, Upper and Lower Cook Inlet Regions,
Fairbanks, North Slope and Southeast regions and was a good
partnership with Aleyeska. Aleyeska had also recently built
a fiber optic system and with the appropriation the State
would be able to work with them to build a State Emergency
Response capability. Co-chair Sharp asked Mr. Fredriksson
to point out if any of the projects were under other than
the 470 funding and Mr. Fredriksson indicated as far as he
knew they were all 470 prevention account. He continued on
the next item, Upgrade, Closure or Clean-Up of Privately
Owned Underground Storage Tanks. He explained underground
owner/operator pay a registration fee and the cost of clean-
up and closure or upgrade of their tanks. Financial
assistance provides some monies to that, however does not
pay the full cost of clean-up and closure or upgrade. In
the capital request there was a listing of owner/operator
projects broken into the clean-up and closure upgrade.
Senator Donley asked if anyone received one hundred percent
to clean up their tanks. Mr. Fredriksson indicated that as
far as he knew, no.
Jim Hayden, Program Manager, Storage Tank Program,
Department of Environmental Conservation was invited to join
the committee. He described the clean-up program. The
match for the owner was $25,000 or ten percent. Once the
$25,000 was reached, the grant took over, according to
statute. Senator Donley asked how many more years the State
had to do this before being completed. Mr. Fredriksson said
234 clean-up applications for a total of $29 million. There
were 184 up-grade applications for a total of $7.5 million.
There were 331 closure applications for a total of $4.2
million. Co-chair Sharp asked if there was a federal
statutory deadline and Mr. Fredriksson indicated the
deadline was December 1998 which is for closure or up-grade.
Co-chair Sharp asked if this was a "drop dead" deadline and
what happened to those who did not qualify by that deadline.
Mr. Fredriksson said at this point the application period
has closed. There are no more opportunities to get on the
list. Whether or not one is one the list does not relieve
them of complying with the federal requirements. It would
include up to six months of FY '99. Senator Donley asked
who would shut down the remaining individuals. Mr.
Fredriksson said it was a federal requirement they come into
compliance. There was the option of either closing out the
tanks and going out of business or upgrading independent of
any state financial assistance. They would have the option,
since they had applications on file, of maintaining those
files and seeking future reimbursement, dependent upon
appropriations. It would primarily be out of their pocket.
Senator Donley asked specifically if the State would shut
down owners who were not in compliance. Mr. Fredriksson
indicated the State would not shut them down but they would
be subject to federal fines. EPA would impose fines. The
State however, would seek to enter into some compliance
agreement with them so they could get on a schedule for
compliance and they could make clear what their intent was.
They would not be allowed to operate out of compliance. If
intent were shown to close out the tanks and there was not
access to close-out monies by the deadline, perhaps the
State would be able to negotiate an arrangement whereby at
least removing fuel from those tanks and work between the
individual and EPA for some leniency in the relief from the
federal penalties. Co-chair Sharp said he thought Alaska
would not be alone in this matter and there would be some
kind of procedure for registration of good intent. Mr.
Fredriksson said the intent would be over a three-year
period and the State would assist in removing fuel from the
tanks in order to get them closed and properly taken out of
service. Senator Donley indicated he just has a problem
with this program from day one. Individuals were allowed to
put the tanks in the ground, got a commercial venture, made
money, withdraw profits for twenty years, they do not plan
to recycle or replace the tanks, and now that there is a
problem the State subsidizes them and helps them fix it.
Co-chair Sharp concurs, however, there were many instances
where individual have purchased property and the one who
made all the money is long gone. Then the Federal
government came in and made all the new laws for clean-up
requirements. But he did note that those still owning
specific property have made a profit off the utilization of
those facilities. Senator Donley said Alaska was the only
state in the union that did not have a funding mechanism
that relates to those who get the benefits. Other states
that have the program those receiving the benefits are
paying, and here the State is just taxing the oil companies.
The consumer pays, not the one who made the profit.
Co-chair Sharp continued the review and asked Mr.
Fredriksson to explain the Local Response Agreements -
Equipment, Training and Preparedness. He said there were a
number of agreements with local communities which allowed
the State to reimburse them for response activities
associated with a spill. The capital request would provide
training and equipment (small, initial, first response
equipment). They have found that those on the local level
arriving on scene first need assistance. Senator Donley
asked the source of funds and Mr. Fredriksson indicated it
was the 470 prevention account.
(There was a brief pause on record.)
Senator Pearce asked if the storage tank program had a
sunset. Mr. Fredriksson indicated that the board of storage
tank assistance did have a sunset. He said HB 138 has been
filed to extend the life of the board. The board allowed
owners and operators to file disagreements appeals. They
heard appeals and made rulings on what were primarily
funding issues, whether allocations were appropriate or
other specific problems an owner/operator may have with
respect to reimbursement of their grant. Senator Pearce
asked if it was the program or the board that was sunsetting
and Mr. Fredriksson said it was the board.
The next item Mr. Fredriksson explained was Consolidated
Upgrade of State-Owned Aboveground Storage Tanks and
Technical Outreach Program. The State owned and operated
aboveground storage tanks needing repair and upgrade. The
request would provide funds to take care of problems with
state-owned facilities. The agencies they have worked with
having the majority of tanks were Department of Education,
Department of Transportation and Public Facilities and the
Department of Fish and Game. The Department of Military and
Veterans' Affairs and a few others also had tanks. Ms.
McConnell pointed out they felt it was necessary to bring
them all in one place because otherwise there was no way of
evaluating whether project number three in the Department of
Transportation was more or less important in terms of
urgency from project number two in the Department of Fish
and Game. By bringing all the projects together they could
now be ranked by degree of urgency under one consolidated
plan.
Mr. Fredriksson indicated the last item was the Aboveground
Storage Tank Upgrades in Rural Alaska. It complemented the
presentation regarding all the fuel tanks, both below and
above ground, publicly or privately owned. It would take
care of approximately ten rural facilities with funding
received through the rural bulk fuel program, administered
by Department of Community and Regional Affairs. They work
closely with the Department of Community and Regional
Affairs to develope and prioritize the list. The intent was
to provide the Legislature with a clear picture of the full
fuel tank needs whether state or privately owned.
Traci Kramer, Administrative Officer, Exxon Valdez Oil Spill
Trustee Council was invited to join the committee. She said
the last project for the Department of Environmental
Conservation was Kodiak Island Borough Waste Management
Implementation. The applicable funds were the civil funds
obtained through the settlement with Exxon. In the current
year, LB&A approved $267,000 for development of a plan in
the Kodiak Island area. The goal of the plan is to identify
problems with marine pollution and to develope cost-
effective solutions to reducing those problems. The
authority in the budget represents implementation of the
final plan being developed in the current year. It was
based on a similar program which the trustee council is
funding in the Sound right now, referred to as the Sound
Waste Management Plan. The trustees have not approved the
capital budget but it is anticipated they will take action
this fall. In response to a question from Co-chair Sharp
she said it would approve the authority of DEC to receive
and expend the joint funds. It would require the unanimous
consent of the trustee council.
Co-chair Sharp asked Annalee McConnell to review the ADA
compliance so the Office of the Governor could be finished
up. She concurred. She said the State was under some
serious requirements to meet ADA compliance for access to
facilities. The total need for all state owned facilities
is estimated to be approximately $44 million. Five hundred
thousand dollars was requested here however clearly that was
not going to be enough to get the state in compliance on the
schedule the federal government has established. Agencies
have made alternative arrangements for access to programs,
but this deals with access to facilities themselves. Last
year the request of $500,000 was reduced to $250,000. She
noted there were a number of lawsuits pending in several
states and Alaska was not alone in non-compliance. Projects
were ranked several years ago based on criteria including
the volume of public access in particular facility, the
degree of problems of access and whether they could be
accommodating in other ways. The list gets updated as there
are new circumstances, included in the back-up. Most of the
work is done through the Department of Transportation.
(There was a brief pause on record while members studied
their back-up.)
Ms. McConnell continued by saying they do try to stick to
the priority list pending any drastic changes in the use of
a facility. Another factor affecting the timing of a
project would be if there was a reason to do other work on
the facility or a deferred maintenance. These would be
consolidated to provide cost-effective upgrades.
Co-chair Sharp said they would reconvene after Easter break
commencing with the Department of Fish and Game.
ADJOURNMENT
Co-chair Sharp adjourned the meeting at 1:23 p.m.
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