Legislature(1997 - 1998)
03/24/1998 06:00 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE 24 March 1998 6:00 p.m. TAPES SFC-98, #94, Sides A and B CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 6:00 p.m. PRESENT In addition to Co-chair Pearce, Senators Sharp, Donley, Parnell and Adams were present when the meeting was convened. Also Attending: SENATOR JERRY WARD; SENATOR GEORGIANNA LINCOLN; SENATOR GARY WILKEN; REPRESENTATIVE ELDON MULDER; REPRESENTATIVE TERRY MARTIN; MARGARET PUGH, Commissioner, Department of Corrections; MARGOT KNUTH, Assistant Attorney General, Department of Law; NANCY SLAGLE, Director, Administrative Services, Department of Transportation and Public Facilities; KEVIN BROOKS, Director, Administrative Services, Department of Fish and Game; BARBARA RITCHIE, Deputy Attorney General, Department of Law; and aides to committee members and other members of the Legislature. SUMMARY INFORMATION Co-chair Pearce invited attending Senators and Representatives to join the committee at the table. She said there was a committee substitute for HB 53 RLS (title am) and explained briefly what HB 53 entailed. For those listening in she noted that the Armed Forces radio network in Fort Greely/Delta Junction area was broadcasting the hearing live. Testimony would be taken via teleconference from the following sites signed on: NOME, FAIRBANKS, DELTA JUNCTION, and ANCHORAGE. She further noted the presence of Commissioner of Corrections, MARGARET PUGH, and Col. ANDERSON, Commander, Fort Greely on line to answer any questions. There were also several amendments to be introduced. Senator Adams asked if staff from Legislative Finance or Legislative Audit were present to look at the Delta agreement and advise what the cost to the State of Alaska would be. HOUSE BILL NO. 53 "An Act relating to the authority of the Department of Corrections to contract for facilities for the confinement and care of prisoners, and annulling a regulation of the Department of Corrections that limits the purposes for which an agreement with a private agency may be entered into; authorizing an agreement by which the Department of Corrections may, for the benefit of the state, enter into one lease of, or similar agreement to use, space within a correctional facility that is operated by a private contractor, and setting conditions on the operation of the correctional facility affected by the lease or use agreement; and giving notice of and approving a lease-purchase agreement or similar use-purchase agreement for the design, construction, and operation of a correctional facility, and setting conditions and limitations on the facility's design, construction, and operation." CS FOR HOUSE BILL NO. 53(RLS)(title am) "An Act expressing legislative intent without the force of law concerning correctional facility space and the Cleary v. Smith case; adding, as a general power of municipalities, the power to provide for, and enter into agreements concerning the confinement and care of prisoners; relating to authorizing the Department of Corrections to enter into agreements to lease facilities for the confinement and care of prisoners with the City of Delta Junction and with the Municipality of Anchorage; and providing for an effective date." Margaret Pugh, Commissioner, Department of Corrections was invited to join the committee. The Department feels that what is contemplated in HB 53 and the direction the Legislature wants them to proceed is compatible with the principals relied upon by them to make decisions regarding the placement of a prisoner in jail. She said the needs in Bethel, North Slope, Valdez, Fairbanks and Juneau should also be considered. She noted her authorization to enter into an agreement with the City of Delta Junction for the operation of a prison at Fort Greely and said it made sense and made for good government. It was wanted and expected that the State of Alaska be doing business with another government, and in this case, the City of Delta Junction rather than a private party for long-term property lease. She said she assumed the Legislature shared her opinion that the operation of the prison would be put out to a fair, competitive bid. She was satisfied that the bill was permissive and gave her the authority to contract for the operation of the prison at Fort Greely. She knows that this is not a blank check and will have some analysis done to ensure that $70 which is the stated price in the letter of intent or whatever number is the right price. She will bring the information gathered back to the Legislature. Senator Adams referred to page 3, lines 6 and 7 wherein the Department of Corrections may enter into an agreement with Delta Junction. Was it up to the City of Delta Junction to work with any correction facility? Did the City of Delta Junction have any experience in running a prison? Commissioner Pugh said not to her knowledge. Senator Adams asked when did they start paying on the eight hundred prison beds? Was this to start after completion of it being turned into a correctional compound? Margo Knuth, Assistant Attorney General, Department of Law was invited to join the committee. She said the payments would start when the building was completed and there were eight hundred inmates at the institution. In response to a query from Senator Donley, Commissioner Pugh said it was her assumption that she would report any findings back to the committee. Ms. Knuth said that since the bill was permissive, the Legislature was saying to the department to investigate the conversion of Fort Greely to a prison and if it makes sense, go forth and do that. The Legislature has given sufficient authorization in the legislation without more. If, however, the Commissioner were to determine that an eight-hundred bed facility could be established somewhere else within the State for only $50/day the Legislature would want to know that information. Senator Sharp referred to Spring Creek and asked if this was authorized by the Legislature and then they went forward. Senator Torgerson said it was done under a lease/purchase agreement. Col. Dave Anderson testified via teleconference from Delta Junction. He said he was prepared to respond to questions posed by Senator Adams at the last committee hearing. Senator Adams asked if there was any other reuse for Fort Greely. He also asked what would happen if the necessary paperwork was not signed by the Governor to reuse Fort Greely as a prison. Col. Anderson said that if the Governor elected to not recognize the local reuse authority then he had the option of designating some other State agency as an implementing LRA. Otherwise the Federal government would dispose of Fort Greely. In that case, there would be no benefit to Delta Junction economically. Furthermore, Federal and State agencies already had the opportunity to attain the property. In response to a query from Senator Sharp he felt the Mayor of Delta Junction could better respond. He could say, however, that the Delta/Greely Community Coalition is the agency designated to plan for the reuse and based on the Governor's approval would be the implementing agency. The coalition would acquire the property and then disperse or sell it. Their intent is to bid the property to a private contractor who would in turn then contract with the City. Co-chair Pearce asked the Mayor of Delta Junction be called and the moderator at the LIO in Delta said she would take care of that. She further requested Col. Anderson remain on line. She alluded to a letter sent out by her office with specific questions for Mr. Ray Woodruff. She noted responses from Mr. Woodruff; John Levine & Company and J. Frank Prewitt. Also attached was data from the Commissioner of Corrections. The following individuals testified via teleconference from DELTA JUNCTION: JIM CARLSTROM; MIKE MCCOWAN; DAVID WRIGHT; PATRICK DALTON, opposed HB 53; MARLIN STARNES; RAY WOODRUFF, formed coalition at the request of Governor Knowles; and BILL JOHSON, testified against the prison in Delta. Due to poor teleconference quality the testimony could not be transcribed. Senator Adams said that at the last meeting it was said that sixty-two percent of the voters voted to have the prison. Now, Mr. Johnson was saying that seven hundred signatures were collected opposing that. Senator Adams said he thought there were about nine hundred registered voters in Delta Junction. He further asked if there was supposed to have been a second vote? Mr. Johnson said he didn't know how many registered voters there were. He said that he did not get a chance to vote in this election. He said notice was given from three days to two weeks ahead of time regarding the matter. This did not meet the criteria for any sort of election under State law. There should have been at least thirty days notice. It was decided by the coalition in mid- February not to bring the matter up for another vote. (Tape #94, Side A switched to Side B at 6:45 p.m.) Glen Wright, Mayor of Delta Junction advised that he was now available via teleconference from Delta Junction. He said he could stay on line, pending the wishes of the Co-chairman but he had a council meeting beginning in about fifteen minutes. Briefly commenting on the election he did not understand how there could be seven hundred signatures opposing the prison. He said the election had been conducted fairly. The final vote count was six hundred forty "yes" votes and three hundred ninety-six "no" votes. These were registered voters or individuals that were allowed to register at the time of voting. Senator Sharp asked what part the City of Delta Junction would play in the whole process? Mayor Wright said according to what was printed in the bill the City would only be a medium. The Governor must first sign the bill before anything could happen. Senator Sharp further asked if the City would be the vehicle whereby the property passes from the State or the military to the private party and Mayor Wright concurred. He said they were not the reuse authority. Senator Torgerson asked the Mayor if residents of outlying areas as well as city residents were allowed to vote? Mayor Wright responded "yes". Senator Torgerson asked if there was a tally of city residents. Mayor Wright said the City of Delta Junction had a total of two hundred eighteen ballots. He did not have the voting breakdown. Senator Torgerson asked if the bill passed where another vote be conducted. Mayor Wright did not see any reason to hold another vote if the bill passed. Senator Torgerson asked Co-chair Pearce if the seven hundred signature petition was part of the committee file? Co-chair Pearce said that Representative Mulder indicated to her that they did not have the signature petition. However, an unidentified individual from the audience said he had the petition in hand with over seven hundred signatures. Co-chair Pearce said there being no further questions for the Mayor he could be excused to attend his City council meeting. She then continued testimony via teleconference. CHARLES ABBOT via teleconference from DELTA JUNCTION said he felt the Delta Coalition ran the election. They did the advertising, printed the ballots, and had the voting run by their office. He said that Mr. Ray Woodruff refused to make the registered voter list public. Mr. Abbott said he questioned the registered voter list and the vote. LIO moderator advised that Mr. Dan Beck had to leave the teleconference hearing. KIM PURUCKER via teleconference from DELTA JUNCTION testified that he was a member of the election board. He did work the election and felt that Mr. Abbott's comments were not valid. He further stated that the coalition did not have the key to the ballot box, but rather the election board did. Everything was run according to election standards. He said he would also like to see the seven hundred signature petition. SUSAN KEMP via teleconference from DELTA JUNCTION testified that she would also like to see the petition signatures checked. She did support the concept of the prison. She would like to see more of a competitive bid process in order to give the community more control over what goes on. She felt it would help to alleviate some of the valid concerns the residents have. SAM DIGHTON via teleconference from DELTA JUNCTION testified in opposition to HB 53. He said the only reason the school system was embracing the prison facility was because they were worried about losing jobs. He said he was notified on the thirteenth by a letter from the coalition regarding the upcoming vote on the seventeenth, however he was unaware that he could register to vote at that time. He felt many people were left in the dark about the voting procedure. NANCI RUTHSCHILD-KENNEDY via teleconference from DELTA JUNCTION testified that most residents were told to vote "yes" even if they weren't sure because they would get another chance to vote later. Many individuals have changed their mind now. She said that there were over thirty individuals who were pressing to acquire the facility to use for their own businesses. BILL PUGH via teleconference from DELTA JUNCTION testified that he did not support HB 53. He said he had been listening to all the testimony and not one individual had testified they were willing to work there. He said he himself intended to work somewhere, but not at a prison that was only going to pay menial wages. He said guards being paid a menial wage would have to supplement their income by going into the prison with their pockets full of one thing and coming out with them full of another thing. He felt the community had a bad enough problem with drugs and this was only dividing them further. He also felt the voting procedure was unfair because there was only four day notice given. He told the committee that the coalition was representing local businesses and not the residents of the community. ROY KENNEDY via teleconference from DELTA JUNCTION testified that he opposed the bill and the election. He said at a town meeting on the fifteenth, the coalition told the residents that this was not a done deal and one could change their mind. DIANA GLOTFELTY via teleconference from DELTA JUNCTION testified that she was in favor of the prison. There are no jobs in Delta and she noted the prison would provide jobs for her two daughters, allowing them to remain in Delta. (Poor quality teleconference noted.) WILBUR ST.JOHN via teleconference from DELTA JUNCTION urged the committee to pass the bill. HUGH DOOGAN via teleconference from FAIRBANKS referred also to his written testimony sent to the committee. He reviewed the cost of an eight hundred bed facility at $63/day and said it would cost the State for twenty years about $366 million. He said a new prison could be built for less than this and it would last more than twenty years. He said Allvest's experience in operating a juvenile detention center in Washington and half-way houses in Alaska was a far cry from operating a prison. GILBERT BOOTH via teleconference from FAIRBANKS said he had a degree in justice and political science. He had done studies on prisons run both by the State and private industry. He felt the passage of HB 53 would greatly help the economy in Delta Junction and that it was a step in the right direction. FRANK SMITH via teleconference from BARROW said he had worked as an administrator of services contracts at the Palmer Pre-trial facility. He said he was very concerned about HB 53. The State was on extremely slippery slope with this bill and felt that the residents of Delta Junction had been sold a slap-dash proposal. He cautioned the Legislature that once they made this twenty-year contract they were going to be stuck with it. BILL PARKER via teleconference from KENAI voiced his concern about the wages of $16/hr at the prison in Delta saying this was not an honest living wage. He said private prisons did not work one hundred years ago and there is no evidence they will work now. He noted they have high turnover, low training and a high abuse of inmates. RONALD WILSON via teleconference from NOME cautioned the residents of Delta, saying working at a prison facility was no just a job for anyone. FRANK GOLD via teleconference from FAIRBANKS said the bill was inappropriate to be going through on a fast track. He suggested looking at two or three smaller prisons. He opposed the bill as it was drafted. He advised the committee that he had sent in written comments to Senator Sharp. Senator Sharp said his correspondence would be distributed to the committee. WAYNE CARPENTER via teleconference from ANCHORAGE said he was a general contractor from Delta Junction. He voiced concern about the bidding process issue. He said it was seemingly corrupt and unbelievably slanted towards Allvest. (Tape #94, Side B switched to #95, Side A.) He said the bill should be amended to state in section 4 that the Commissioner of Corrections must require agreement with the City of Delta Junction and that the City of Delta Junction procures a private third-party operator through a process similar to the procedure established in Alaska Statute 36.30, State Procurement Code. LESLIE KIRK and RUSS BOWDRE were invited to join the committee. Mr. Bowdre said they were from Delta Junction and he was here to testify on behalf of many concerned citizens from Delta Junction. He voiced concern about what was taking place. He said he was in charge of the roads and grounds section and heavy maintenance out at Fort Greely. In reference to the number of registered voters he said there were 910 registered voters. Approximately 396 "no" votes and 514 "yes" votes. Approximately 218 voters were actually from Delta Junction. Mr. Bowdre said he was against the prison, along with many other concerned citizens. They feel that if there has to be a prison it should be a State prison and up for bid. He suggested the Legislature really look at a prison in Delta Junction. Another possibility would be to expand existing prisons therefore incurring no new administrative costs. Mr. Kirk introduced himself to the committee and said he was Retired Commander of Fort Greely. He felt this whole proposal was set up by a coalition consisting of the business people of the City of Delta Junction. He was concerned because the residents had been told they could change their vote regarding the prison at a later time, however, there was no second election. In referring to the seven hundred signature petition against the prison he said most people just want a legal vote by the residents of Delta Junction on whether to have the prison or not. Senator Adams asked Mr. Kirk and Mr. Bowdre if they had read the coalition's agreement signed behind closed doors and both gentlemen advised they had. Senator Adams asked when would Allvest wholly own the prison. Mr. Bowdre said, according to the agreement, the local reuse authority agrees to immediately transfer title to the City of Delta Junction and they agree to immediately transfer title over to Allvest. It would go in five year increments for a specific period of time. Senator Adams asked if there was any other reuse besides a prison for Fort Greely. Mr. Kirk said there had been no response from any Federal or State agencies that had been contacted regarding the reuse of Fort Greely. Mr. Bowdre informed the committee that on the 14th of July 2001 BRAC would die at Fort Greely and it would then go back to the U.S. Army for reuse in any way they see fit. Therefore, if the Governor did not sign the bill, regulations say that it could be sold. (Co-chair Pearce recessed the committee for five minutes. She reconvened the meeting at approximately 8:07 p.m.) Representative Eldon Mulder was invited to join the committee. He said he did not mind differing opinions, however it was important to apply the facts to the situation. He corrected the record by referring to a memo to House Finance Co-chairman Mark Hanley dated 27 February 1998. It stated that Fort Greely was $10/day less than expanding the Palmer facility. Representative Mulder further stated that he did not think it would actually cost $70/day at Fort Greely. Senator Adams asked if the cost would be approximately $65/day per bed? Representative Mulder said the number had been debated in House Finance for a considerable length of time. The $70/day figure had been settled on because it would give them an adequate level to provide some security for the State, and at the same time could justify incremental increase over Arizona. These would be in-State jobs and the economy would be coming in-State, providing a stable tax base for a local community. In response to a request by Representative Mulder that he be allowed to comment on any amendments presented on the bill, Co-chair Pearce said the committee would be happy to accommodate him. ROSS KINNEY, Deputy Commissioner, Treasury Division, Department of Revenue was invited to join the committee. He believed that the State of Alaska could finance this project much cheaper than any third-party or private vendor could. He said by using certificates of participation, and agreements like those used in Seward and throughout the State, they would be in a position to finance this cheaper and in the end have ownership of the facility. He said as it was, Allvest would be able to refinance the facility and garner the savings. He also added that they were in a situation where the debt payment was a result of the lease payment made by the State of Alaska to whomever. It would be placed as collateral for payment of the debt and they would be locked in to being ultimately responsible for the retirement of the debt regardless of who the owner of the facility was. Senator Adams asked if Mr. Kinney had a proposed amendment the committee might look at regarding his concerns. Mr. Kinney said he did not have any specific language at hand, but said it could be prepared in short order and provided the committee. Senator Sharp asked if Mr. Kinney's opinion would be the same if the State were to finance the Anchorage jail. Mr. Kinney said that if the State were to finance that project they could also do that one cheaper and felt more comfortable with a government to government relationship. Senator Phillips asked Mr. Kinney if he were speaking in opposition to the bill on behalf of the Administration. Mr. Kinney said he had not taken any position on the bill with exception to the finance aspects, as to whether either should be done. J. FRANK PREWITT was invited to join the committee. He said the State of Alaska was currently purchasing correctional services from the Corrections Corporation of America, through a facility owned and operated by the Corrections Corporation of America. The State was satisfied to purchase these services in order to relieve the overcrowding situation when they entered into contract with them about three years ago and at the prices the CCA was able to accommodate. He said this was an Alaska corporation who after three years of impasse on how to address the question of the Alaska prison crisis, took the initiative to go out to Fort Greely, talk to the coalition to learn about the base reutilization process, and who participated in a Federal competitive procurement process. In order to do this they had to assess whether or not the facility was feasible to become a correctional facility and would be cost-effective. He said the community, through an election process, determined this was an acceptable reuse of the facility. He said this was the "Allvest proposal" that was before the community and not a generic proposal. He said they were offering to the State of Alaska a solution that would help the economic welfare of the City of Delta Junction and will offer the State a competitively priced solution for prison overcrowding. Senator Adams asked about the competitive process and noted that it would be difficult for other contractors to bid since Allvest has the facilities. He asked if Allvest would be willing to give another bidder a good deal on the facilities. Mr. Prewitt said Allvest supported the provision of HB 53 that required the City of Delta Junction to enter into a procurement process for the purchase of the operating services. But he further stated that the contract with the Corrections Corporation of America was a sole source contract entered into by the Department of Corrections. There was no bidding process. He said it was not uncommon for the State of Alaska to negotiate for unique services. For instance, the State of Alaska negotiates for lease space for offices and oil lease royalties. He noted the State had been offered the opportunity to have Fort Greely but they had not responded. The idea was developed entirely by Allvest, an Alaska corporation. Two corporations that have now shown an interest are both out of State, hostile to an Alaska company, that is trying to do a project in the best interest of the State. Senator Adams said he did not believe the amendments were hostile and that they were good for business. Mr. Prewitt said Allvest was still willing to compete in the procurement process. REPRESENTATIVE MULDER rejoined the committee at this point. Co-chair Pearce said if there was no other testimony to be taken or questions by the committee they would now move to amendments. Senator Parnell MOVED amendment #1. Senator Adams OBJECTED and then REMOVED his objection. WITHOUT OBJECTION amendment Senator Sharp MOVED amendment #2. Senator Adams OBJECTED to page 3, line 14. Senator Sharp said the first part of the amendment was a technical change of "may" to "shall" and the rest of the amendment dealt with the Anchorage jail. He said by loading in the specific figures this would provide a safeguard. Senator Adams said the question should be divided. He said the first section dealt with Delta Junction prison and the remaining sections dealt with Anchorage. This was two different subjects. Senator Sharp had no objection to the question being divided. WITHOUT OBJECTION Co-chair Pearce noted that amendment 2(A) would be page 3, line 14 and amendment 2(B) would be the remaining three sections of the amendment. Representative Mulder said the issue had been discussed in House Finance. They wanted to afford Delta Junction the same opportunities. (Tape #95, Side B switched to #96, Side A.) Senator Donley OBJECTED to amendment #2(A) and then WITHDREW his objection. WITHOUT OBJECTION amendment #2(A) was ADOPTED. There followed miscellaneous conversation between committee members regarding amendment #2(B). Senator Donley said the amendment could be dealt with conceptually. Therefore, amendment #2(B) was amended as follows: Page 4, line 6 the amount of "$125,000" was deleted and the amount of "$146,000" was inserted and on Page 4, line 7 the amount of "$12,000" was deleted and the amount of $16,700" was inserted. Senator Donley WITHDREW his objection. WITHOUT OBJECTION amendment #2(B) was ADOPTED. Senator Sharp MOVED conceptually amended amendment #2 and WITHOUT OBJECTION it was ADOPTED. Senator Phillips MOVED amendment #3. He explained to the committee that the amendment had been amended by hand to reflect the correct page and line numbers. Senator Sharp OBJECTED. By a roll call vote of four yeas (Pearce, Donley, Phillips, Parnell) and three nays (Sharp, Torgerson, Adams) amendment #3 was ADOPTED. Senator Torgerson MOVED amendment #4. As a technical correction he noted that only lines four through eight of the amendment were valid. Senator Donley OBJECTED. Representative Mulder said he also opposed the amendment. Commissioner Pugh rejoined the committee and in response to a question from Senator Phillips explained the bid process. MARJORIE VANDOR, Assistant Attorney General, Civil Division, Department of Law was invited to join the committee. She explained the procurement code. There followed miscellaneous discussion between Senators Torgerson, Phillips and Parnell. Senator Donley maintained his OBJECTION. By a roll call vote of three yeas (Torgerson, Phillips, Adams) and four nays (Pearce, Sharp, Parnell, Donley) amendment #4 FAILED. Senator Torgerson MOVED amendment #5. There was OBJECTION. Representative Mulder also opposed the amendment. He said the facility at Fort Greely would provide eight hundred beds at a great price. By a roll call vote of two yeas (Torgerson, Adams) and five nays (Pearce, Sharp, Parnell, Donley, Phillips) amendment #5 FAILED. Senator Torgerson MOVED amendment #6. Senator Donley OBJECTED. Representative Mulder also opposed to the amendment. Senator Donley said there was an immediate overcrowding problem and it needed to be resolved in a specific time frame. By a roll call vote of two yeas (Torgerson, Phillips) and five nays (Pearce, Sharp, Parnell, Donley, Adams) amendment #6 FAILED. Senator Torgerson MOVED amendment #7. Senator Donley OBJECTED. Representative Mulder also opposed the amendment. The presence of Senator Jerry Ward was noted for the record. He concurred with the opposition of Representative Mulder. He felt the amendment was not applicable to a short-term fix. By a roll call vote two yeas (Torgerson, Adams) and five nays (Pearce, Sharp, Donley, Parnell, Phillips) amendment #7 FAILED. Senator Torgerson MOVED amendment #8. Senator Donley OBJECTED. Representative Mulder also opposed the amendment. By a roll call vote of three yeas (Sharp, Torgerson, Adams) and four nays (Pearce, Parnell, Donley, Phillips) amendment Senator Adams MOVED amendment #9. Senator Donley OBJECTED. Representative Mulder also opposed the amendment. (Tape #96, Side A switched to Side B.) Senator Adams said Alaska sometimes had short-term inmates from somewhere else. He did not have any objection to prisoners being shipped outside Alaska because it allowed them to be closer to their home locations. It was a way for "blue tickets". He felt the amendment would save the State money. Co-chair Pearce asked Senator Adams if his corrected amendment deleted the amount of "800" on line eight, and inserted the amount of "500". Senator Adams indicated this was correct and the Secretary was asked to make this correction on the amendment. By a roll call vote of two yeas (Adams, Torgerson) and five nays (Pearce, Sharp, Donley, Parnell, Phillips) amendment #9 FAILED. Senator Adams MOVED amendment #10. Co-chair Pearce OBJECTED. Representative Mulder also opposed the amendment. Senator Adams said the bush also had problems with crime and overcrowding in the facilities. This amendment would allow expansion of the Yukon-Kuskokwim Correctional Center in Bethel. Representative Mulder said the reason he and House Finance opposed this amendment was because they were looking at the possibility of placing offenders in "halfway houses" and require culturally relevant programs to be instituted. By a roll call vote of two yeas (Adams, Torgerson) and five nays (Pearce, Sharp, Donley, Parnell, Phillips) amendment Co-chair Pearce advised the committee that there was a Letter of Intent offered by the House Rules Committee and was in members' files. She asked the committee to be prepared to decide whether or not they wanted to move that Letter forward with the bill. Senator Adams moved amendment #11. Senator Phillips OBJECTED. Representative Mulder also opposed the amendment. Senator Adams noted that due to fire code violations the facility in Barrow was due to be closed. This amendment would allow for a lease-purchase agreement for a facility in the North Slope Borough. By a roll call vote of one yea (Adams) and six nays (Pearce, Sharp, Donley, Torgerson, Parnell, Phillips) amendment #11 FAILED. Senator Donley MOVED the Letter of Intent, dated 3/2/98 and WITHOUT OBJECTION it was ADOPTED and ordered sent to the floor accompanying the bill. Senator Sharp asked the Department of Corrections to provide an estimated cost per day on the Anchorage facility. Commissioner Pugh said she did not have those figures with her but they would be provided the committee as soon as possible. Ms. Knuth advised the committee that with the capitalization of the construction money being added in, the costs just went up. Senator Sharp indicated that it would add $33 million to the twenty-year total. Ms. Knuth said they would work on it and provide the information to the committee. Co-chair Pearce thanked her and the Commissioner. Senator Adams requested that Mr. Kinney be recalled to join the committee. He asked that with the way the bill was written did it allow for State bond participation? Mr. Kinney said that the way the bill was currently written it did not. Senator Adams wanted to know the excess costs in State versus the Delta facility and then State versus the Anchorage facility in order to see the difference. Mr. Kinney said he had no idea what the numbers were on the Delta facility project. He indicated the problem was a private corporation utilizing State credit with a number of intermediaries in between. Anchorage had basically the same problem. They were going to be pledging the payment stream from the State of Alaska, as the collateral for the debt in order to make their payments. He reiterated that his major concerns regarding the bill were the financial issues. Senator Lincoln said she appreciated the committee's diligence in listening to long hours of testimony and their consideration of the bill. She knows the decision is a very difficult one. Senator Adams requested the Department of Law to review AS 33.30.031 in section 6 and asked what was being left out. Ms. Knuth explained that AS 33.30.031 (a) required the Commissioner to make a finding that, "there are no beds available in-State before sending prisoners out of the State." And by holding that section as not applicable for the Fort Greely prison usage enables the Commissioner to send prisoners to Arizona even if there is space available at Delta Junction. Senator Donley MOVED SCS CSHB 53(FIN) with accompanying Letter of Intent, fiscal notes and individual recommendations and WITHOUT OBJECTION the bill was REPORTED OUT. Accompanying fiscal notes were: Department of Administration/Leasing, zero; Department of Revenue, zero and Department of Corrections, $395.8. Co-chair Pearce recessed the committee for a five minute break at approximately 9:30 p.m. She reconvened the committee at approximately 9:40 p.m. to consider HB 461. HOUSE BILL NO. 461 "An Act making supplemental and special appropriations; and providing for an effective date." CS FOR HOUSE BILL NO. 461(FIN) "An Act making supplemental and special appropriations and amending appropriations; and providing for an effective date." Co-chair Pearce introduced SCS CSHB 461(FIN), work draft, that had already been adopted by the committee. She advised the committee that it was before them for any questions and discussion the committee may have but there would be no public testimony. Attached to the work draft was a copy of a spread sheet from Legislative Finance and how the bill currently looked. There were some proposed amendments also in members' files. Senator Donley requested that the Department of Fish and Game come to the table. The committee was advised that the front door of the building was locked and they were temporarily waiting for departmental personnel to arrive. Co-chair Pearce then said they would go to amendments. Senator Phillips MOVED amendment #6. Senator Torgerson OBJECTED. Senator Phillips said the amendment would provide funds to redo the Tok Cut-off. He felt this was a project that needed to be done as soon as possible. Senator Torgerson said that if the committee was really serious about rewriting projects in the STIP and coming forth with projects that had been ignored around the State it was not proper to take $9 million off the table. This was just a project that was brought forward by the department. He referred to a letter from the Commissioner just handed out to committee members regarding the Soldotna Bridge that was going to have to go on weight restrictions and the promise that they would take care of that with first available funding. There were many other repair projects and this request did not stand any test as far as ranking amongst other projects around the State. Senator Adams said under the Alaska National Highways system, this section of road was the worst section. He concurred with the amendment because it would help in public safety. It would also help in long-term economic development of the roads for tourism. He also agrees with his colleague from Kasilof and noted that all three amendments were good projects. Senator Sharp said that in Commissioner Perkins' letter it was stated that the project was contained in the 1998 STIP. Senator Torgerson responded saying that a couple of projects had been moved up and it was a combination from 1998. Senator Sharp said his question was if it was included in the 1998 STIP as a project as stated in the Commissioner's letter, was it included for the amount of money being talked about now? He did not understand why it was being brought up now. NANCY SLAGLE, Director, Administrative Services, Department of Transportation and Public Facilities was invited to join the committee. She said the 1998 capital budget was based on a STIP that was developed several years ago. She said it included several projects due for construction between the years 2000 and 2004. She noted deterioration of the road and weather conditions and said several of those projects were consolidated into one single project now showing in the 1998 to 2000 STIP. This was approved by the Federal Highway Administration in February. Senator Sharp said he did not get a total calculation from the Department of Transportation of all the monies put into the Tok Highway since 1989. He noted that over the past years approximately $15 million to $25 million per year have been put into that road. If it has not held up then there are serious problems. Senator Donley concurred with Senator Sharp. He felt the problem was there was no technology to rebuild the road and make it stick. He said it was on the edge of permafrost. He said he had not been convinced by the department that they had a plan to deal with this problem. He further did not understand why it was put in the fast-track supplemental. He asked Ms. Slagle that if the committee authorized the requested amount of money how much could they spend before the end of this fiscal year? Ms. Slagle said not all of it could be spent before 30 June. The department would spend it all during this construction season. They need the authority to go out to bid and then award a contract prior to 30 June. That's why they need all the funds the sooner the better so the project could be completed during the construction season. Senator Donley voiced his continued concern. He said this project did not rise to the level to be the only road project in the fast-track supplemental. There were other road projects needing quicker attention. Senator Phillips recalled the only repair to the road was fourteen miles done in 1984 - 1985. The rest went back to the mid-60's. He said much of the road was its original construction. Senator Parnell asked if anything extraordinary happened to the Tok Highway in the last six month to one year that was not anticipated before? Ms. Slagle said the weather conditions of last summer aggravated the problems that were found on the road. It had caused a larger concern on the part of those who had to travel it, including the independent traveler and the trucking industry. Senator Parnell said he shared the concerns of Senators Donley and Torgerson. However, he felt that there were other roads that could be considered in the fast-track supplemental. Senator Sharp said there had been promises made that the original section of the Alaska Highway road was going to be repaired for the past five years. He noted how narrow the road was and that said there was not ten inches of shoulder either side of the road. He said however, that he would vote in favor of this amendment because the road was a vital link to get the tourists into Anchorage and Fairbanks. Senator Donley said he would like to vote in favor of this amendment but he did not see the distinction of this road and other really imperative transportation projects around the State. He felt the department had not made a good case and said the department had such a bizarre record in how they had manipulated the STIP over the years. Senator Torgerson said he thought the debate had been good and had no objection to seeing the project going forward, however, not in this form. In referring again to the Soldotna River bridge he said it had been constructed in 1962 and felt it would rank higher than the Tok Highway project. Senator Phillips reiterated this was the worst section of the road. Both international truckers and American Customs had complained to him regarding the condition of the road. By a roll call vote of four yeas (Pearce, Sharp, Phillips, Adams) and three nays (Torgerson, Parnell, Donley) amendment Senator Adams MOVED amendment #7. Co-chair Pearce objected. By a roll call vote of one yea (Adams) and six nays (Pearce, Sharp, Donley, Torgerson, Parnell, Phillips) amendment #7 FAILED. Senator Torgerson MOVED amendment #8. Senator Sharp OBJECTED. Senator Torgerson explained that these were projects promised by the Department of Transportation. The Kenai Bridge needed to have been done a long time ago. Co- chair Pearce asked if the bridge project had been authorized. Senator Torgerson said it was in the STIP on page eight. Senator Donley felt the amendment included two projects and it therefore should be divided. Amendment #8(A) would become the Soldotna Urban and Kenai River Bridge and amendment 8(B) would become the Funny River Road. (pause on record) Senator Donley MOVED the division of amendment #8 as explained and WITHOUT OBJECTION it was so ORDERED. Senator Parnell asked if this was different that the previous amendment. Co-chair Pearce indicated that this was a request by the Administration but did not mean that the Senate Finance Committee had to include it as she was uncomfortable adding new projects. The whole mission was to cut down the supplemental to fit into $16.5 million. To begin adding back, in her opinion, in budget parlance, was going in the wrong direction. She did, however, understand Senator Torgerson's frustration with the Department of Transportation. She asked for the correct figures before the committee took any action. Senator Torgerson advised the correct numbers for amendment Federal funds and $805,000 general fund match. Co-chair Pearce asked Senator Sharp, since he was doing the capital budget if he had any comments. Senator Sharp said with the flexibility the department showed in regards to the STIP, therefore the committee was entitled to some flexibility when writing the budget and what is put in the STIP. Senator Torgerson moved amendment #8(A) and by a roll call vote of four yeas (Donley, Torgerson, Parnell, Adams) and three nays (Pearce, Sharp, Phillips) it was ADOPTED. Senator Torgerson then advised the correct numbers for amendment #8(B). The breakdown for the amount of $4,200,000 was: $3,820,800 Federal funds and $379,200 in general funds. Senator Sharp moved that #8(B) be amended to take the GF out of SLA 1996 GF, same as in the description of the Tok Highway. Senator Adams OBJECTED and then WITHDREW his objection. WITHOUT OBJECTION amended amendment #8(B) was AMENDED. Senator Torgerson MOVED amended amendment #8(B) and by a roll call vote of three yeas ((Sharp, Torgerson, Phillips) and four nays (Pearce, Donley, Adams, Parnell) FAILED. Senator Sharp MOVED to RESCIND adoption of amendment #8(A). Senator Torgerson OBJECTED and then WITHDREW his objection. WITHOUT OBJECTION action on amendment #8(A) was RESCINDED. Senator Sharp MOVED to amend amendment #8(A) by reappropriating $805,000 GF be taken out of SLA 1996 GF. Co-chair Pearce requested the committee take an at ease. Upon reconvening the committee a roll call vote was taken on amended amendment #8(A). By a vote of six yeas (Sharp, Adams, Parnell, Torgerson, Donley, Phillips) and one nay (Pearce) amended amendment #8(A) was ADOPTED. Co-chair Pearce requested the committee take another at ease. She reconvened the committee at approximately 11:00 p.m. Senator Donley MOVED to RESCIND committee action on amendment #6. Senator Torgerson OJBECTED. By a roll call vote of five yeas (Pearce, Sharp, Donley, Phillips, Parnell) and two nays (Torgerson, Adams) committee action on amendment #6 was RESCINDED. Senator Donley MOVED rescinded amendment #6 and by a roll call vote of six yeas (Pearce, Sharp, Donley, Phillips, Adams, Parnell) and one nay (Torgerson) it was ADOPTED. Senator Sharp MOVED to RESCIND committee action on amended amendment #8(A). Senator Torgerson OBJECTED. By a roll call vote five yeas and two nays it was RESCINDED. Senator Sharp MOVED amended amendment #8(A) and by a roll call vote of two yeas (Torgerson, Adams) and five nays (Pearce, Sharp, Parnell, Donley, Phillips) it FAILED. (Tape #96, Side B switched to Tape #97, Side A.) Senator Adams MOVED amendment #10. He said the amount of $199,500 would be appropriated from the general fund, of which the sum of $102.700 would go to the Department of Law for the tort reform constitutional challenge and the sum of $56,800 be appropriated form the general fund for the Department of Fish and Game for land lease costs at the Sikusuiliaq Hatchery for the fiscal year ending June 30, 1998. Senator Donley OBJECTED. Senator Adams spoke to his amendment. Senator Donley asked Senator Adams to explain why the amount of $56,800 was needed. Senator Adams said 2.5 acres of land was leased from a private individual by the State of Alaska for a hatchery. It was not funded and therefore is passed lease payments that are owned to an individual. In further response to Senator Donley, Senator Adams said the hatchery was closed now. This was monies owed to the individual. By a roll call vote of one yea (Adams) and six nays (Pearce, Sharp, Donley, Torgerson, Parnell, Phillips) amendment #10 FAILED. Senator Donley advised Co-chair Pearce at this time he would not be offering amendment #9. Senator Donley requested the Department of Fish and Game be called to join the committee. KEVIN BROOKS, Director, Administrative Services, Department of Fish and Game was invited to join the committee. Senator Donley asked him to explain "commercial fish" and "sport fish" for the committee because the department had a very confusing relationship between the two regarding funding. He said there were certain Federal requirements regarding the segregation of those funds. Senator Donley said he had asked the Commissioner for a clarification but received only a philosophical reply. He said he knew sport funds were used indirectly but wanted to be assured they were not being used improperly. Mr. Brooks said the particular receipts in question for the Sitka Test Fishery were test fisheries receipts and were created last year. They were generated by the department contracting a vessel to go out and commercially fish prior to the opening of a fishery. Those fish taken were then sold under the department's fish ticket and the funds were used for management of that fishery. He said this had nothing to do with the Fish and Game fund or Federal aid dollars. It is a specific, distinct funding source, used exclusively in the "com fish" side of the department. Senator Donley said he understood that, but was afraid the department was using sport fish funds to cover administrative costs. Mr. Brooks said approximately six percent of all contracts was assessed for an administrative overhead which was covered by Federal aid dollars. Fish and Game funds were used within the Division of Administrative Services primarily to run the licensing program to license anglers and hunters throughout the State. The third piece of the budget was made up of general funds which is just under $1 million. That money benefits all divisions within the department. He further noted that every project they do and every use of the dollars has to be approved by the Federal granting agencies. This was a fairly vigorous approval process for expenditure of those funds. They not only go through a process with the State Legislature but also the Federal granting agencies. Senator Parnell asked about the Bristol Bay incident wherein fishermen were concerned about the State using a seiner in the area and further that the waters were closed to commercial fishermen. He wanted to know how these receipts were related to the Sitka herring roe; if these were receipts from test fisheries in Southeast or were they Statewide receipts. Mr. Brooks said the receipts for the Sitka herring fishery would occur in Sitka. Receipts were kept by region or area. Any receipts generated in Bristol Bay would be used in Bristol management. Senator Sharp MOVED SCS CSHB 461(FIN) and WITHOUT OBJECTION it was REPORTED OUT with individual recommendations. Co-chair Pearce reviewed the schedule for tomorrow, indicating the committee would meet again at 10:00 a.m. and 4:30 p.m. ADJOURNMENT Co-chair Pearce thanked fellow Senators and all staff for remaining in session late into the evening. She recessed the committee at approximately 11:30 p.m. SFC-98 -1- 3/24/98
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