Legislature(1999 - 2000)
02/22/1999 09:00 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 22, 1999
9:00 AM
TAPES
SFC-99 # 33, Side A (000 - 588)
Side B (588 - 000)
CALL TO ORDER
Co-Chair Sean Parnell convened the meeting at approximately
9:00 A.M.
PRESENT
In addition to Co-chair Parnell, Senators John Torgerson,
Loren Leman, Gary Wilken, Pete Kelly and Lyda Green were
present when the meeting was convened. Senators Phillips
and Adams arrived shortly thereafter. Senator Donley was
absent.
Also Attending: ANNALEE MCCONNELL, Director, Office of
Management and Budget; DAN SPENCER, Chief Budget Analyst,
Office of Management and Budget; BOB POE, Commissioner,
Department of Administration; ALISON ELGEE, Deputy
Commissioner, Department of Administration; SHARON BARTON,
Director, Division of Administrative Services, Department
of Administration; MARGARET PUGH, Commissioner, Department
of Corrections; REMOND HENDERSON,, Director, Division of
Administrative Services, Department of Community and
Regional Affairs; KAREN REHFELD, Director, Education
Support Services, Department of Education; KEN BISCHOFF,
Director, Division of Administrative Services, Department
of Public Safety; ROSS KINNEY, Deputy Commissioner,
Department of Revenue; CAROL CARROLL, Director, Division of
Support Services, Department of Natural Resources; NICO
BUS, Administrative Services Manager, Department of Natural
Resources; JANET CLARKE, Department of Health and Social
Services; BARBARA RITCHIE, Deputy Attorney General, Civil
Division, Department of Law; KATHRYN DAUGHHETEE, Deputy
Director, Division of Administrative Services, Department
of Law; NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public
Facilities; DAVID TEAL, Director, Division of Legislative
Finance; GINGER BLAISDELL, JIM HAUCK, PHIL OKESON, Fiscal
Analysts, Division of Legislative Finance; aides to
committee members and other members of the Legislature.
Attending via Teleconference: BARBARA MIKLOS, Director,
Child Support Enforcement Division, Department of Revenue;
JOHN MALLONEE, Assistant Director, Child Support
Enforcement Division, Department of Revenue; BRANT MCGEE,
Public Advocate, Office of Public Advocacy, Department of
Administration; BARBARA BRINK, Director, Public Defender
Agency, Department of Administration were present via
teleconference from Anchorage.
SUMMARY INFORMATION
Co-chair Parnell convened the meeting at approximately 9:05
a.m. He advised the committee they would take up SB 72
first.
SENATE BILL NO. 72
"An Act making and amending appropriations under art.
IX, sec. 17(c), Constitution of the State of Alaska,
from the constitutional budget reserve fund; and
providing for an effective date."
ANNALEE MCCONNELL, Director, Office of Management and
Budget was invited to join the committee. She said that
Commissioner Poe would conduct the explanation of the
Office of Management and Budget handout.
BOB POE, Commissioner, Department of Administration was
invited to join the committee. He explained the Projected
Daily Cash Sufficiency Balances handout sheet. (Handout
attached to original file.)
ROSS KINNEY, Deputy Commissioner, Department of Revenue was
invited to join the committee. He explained royalty
payments from the Department of Natural Resources, tax
receipts, payroll and university payments.
Commissioner Poe, with reference to the handout, continued
explaining that by the end of March we were above zero.
The first part of April we were still also above zero.
However, when payments around the tenth of April become due
they go up. By the end of April they go below zero and the
end of May they are barely covering costs. The schedule
shows that they never really recover above zero after that.
This was referred to as "checkbook accounting". Therefore,
after the 25th of March they should not be writing any more
checks.
Co-chair Parnell asked about a possible identity plan. Mr.
Kinney said this was the only consideration of the general
fund and it was a temporary situation. Monies could be
borrowed from other sub funds pending commitment from this
body. It would be like issuing a revenue anticipation
note. However, he noted that they were concerned about
what to pick and choose.
Commissioner Poe explained the sub funds. He cited oil
revenues for an example. Co-chair Parnell was not
suggesting that they go below zero and then use sub
accounts. This would just be used as a contingency plan.
According to Commissioner Poe, however, this did not mean
that the State was out of money.
Co-chair Parnell asked if there were any other charts or
graphs that Commissioner Poe might want to present to the
committee. The Commissioner responded that he had
concluded his testimony unless there were further questions
by the committee members. Co-chair Parnell thanked
Commissioner Poe and Mr. Kinney for their presentation.
Co-chair Parnell then asked Ms. McConnell to remain at the
table for any questions the members may have.
Ms. McConnell explained that the language used was the same
as in previous years.
Mr. Kinney referred to $132 million dollars and how it was
to be used. Ms. McConnell explained what was corrected
with what funds from that amount.
Senator P. Kelly asked about the availability of funds.
Commissioner Poe responded.
Co-chair Parnell asked the number necessary to meet the
appropriations of FY 99. Ms. McConnell said approximately
$1.2 CBR, total, was needed. Co-chair Parnell asked for an
exact figure? Ms. McConnell said different numbers were
being heard because of different oil returns on a daily or
weekly basis. It was impossible to predict the requirement
to meet the expenditures the Legislature set aside.
Co-chair Parnell asked where we were presently. Mr. Kinney
replied that oil had dropped below $10/barrel. The price
had averaged $12.75/barrel up until now. He advised that
the number is continuously subject to change, however, and
at present it is not looking positive.
Senator Torgerson asked Mr. Kinney to explain the
contingency plan, which authorized them to borrow money.
Mr. Kinney said by statute this authorization was granted
to the Commissioner. The problem they were facing was that
there was no money coming in at a later date to pay this
money back. A substantial draw was expected to be taken
from the CBR to meet the need. They will also need an
appropriation for interest.
Ms. McConnell further said that the reason for setting up
the CBR the reason was due to this volatility. The closer
we get to the end of the fiscal year, agencies need to
adjust their monies. This tended to create an untenable
situation.
Mr. Kinney said it would take about ninety days to procure
a packet to go to the market for a loan. In response to a
query from Senator Parnell, he said that without the
possibility of payback it would be useless to prepare this
packet for the loan.
Senator Torgerson asked if they would be required to come
back if they borrowed money to get authorization from the
Legislature? Mr. Kinney said the Commissioner could only
borrow if he had the funds to repay the interest necessary
plus the amount. Money would have to be paid back by the
end of the year. Otherwise it would have to be paid back
on a long-term basis.
Senator P. Kelly asked if they structured how government
could be financed differently would this be of help or an
incursion of the situation.
Mr. Kinney explained that there was plenty of money
available, however blocks are drawn around them and they
need a super-majority vote to get around this. For
instance, he said the Department of Education did not
really need to go out to borrow monies.
Ms. McConnell referred to the State income tax issue. She
explained the revenue anticipation. Sufficient money could
be received within a few months. She said, however, that
the present situation was different. They would not be
facing the same issue as to what they need if this
situation was structured correctly.
Commissioner Poe also responded. There were other bonds
the State had issued recently and they have gotten high
ratings. It is known that the State does have money.
Co-chair Parnell asked when the next forecast would come in
from Dr. Logsdon. Mr. Kinney said possibly in March. Ms.
McConnell also concurred saying that by approximately the
first of April the forecast would be ready.
Co-chair Parnell thanked Ms. McConnell, Commissioner Poe
and Mr. Kinney. He HELD SB 72 in committee.
He then called SB 83 and asked Ms. McConnell to remain at
the table to assist the committee members.
SENATE BILL NO. 83
"An Act making and amending capital, supplemental, and
other appropriations, and appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
Ms. McConnell said the departments were present to answer
any specific questions the committee may have. After a
brief explanation, she requested the Pioneer Homes be
treated the same as the University. This was suggested as
a way of solving some of the problems the Pioneer Homes
were having, such as an acute shortage of staff. She
pointed out that this was highlighted in the bill on page
ll, section 21 and described as "belt tightening" by the
Governor. What is not seen is where the departments have
worked to cover their costs. The amount needed is
approximately $5 million over the supplemental request.
Co-chair Parnell said he would ask the department heads to
come up individually and explain. The first was economic
disaster.
CAROL CARROLL, Director, Division of Support Services,
Department of Natural Resources was invited to join the
committee. She briefly explained the western Alaska
fisheries disaster. Senator Leman referred to list of
vendors that were paid regarding this situation. He asked
what this disaster relief money covered. She said it was
for electric, fuel, food and basic emergency living
expenses.
Ms. McConnell also commented on the western Alaska
fisheries disaster. She said that rather than provide cash
assistance, which is normally done, i.e., Miller Reach
Fire, they tried to provide assurance that the monies were
going for basic emergency living expenses. In order to
abide by strict requirements, an individual needed to
provide either a commercial fisheries license or crew
member license. Any aid provided was for food stamp
approved items. This aid also allowed for the purchase of
home heating fuels, water, sewer and electric. Assistance
was limited to approximately $1,500/ person and
$5,000/household. As a comparison, the average assistance
for an individual family in the Miller Reach fire was
$10,000.
Co-chair Parnell commented on the economic disaster
situation in western Alaska. FEMA turned down a request
for these funds. He noted that they did not help the
farmers in America, either. Who came and requested the
economic disaster money?
Ms. McConnell explained that it became clear the fish runs
in the Bristol Bay area were extremely low. However, the
cause was not known. It had a genesis in the higher ocean
temperatures and problems with the fish not coming back to
the area due to these warmer temperatures. Salmon are
Alaska's biggest crop and are highly dependent on
conditions beyond our control, i.e., water temperatures.
They made the same argument as the farmers in Washington
D.C. FEMA still refused aid, however they did bring
together a package of assistance from other available
funds. The Governor declared a disaster area and asked the
Legislature to have a special session if necessary.
Co-chair Parnell asked if the Administration was proceeding
under Title 26? Ms. McConnell responded they were. Co-
chair Parnell read the provision into the record. Did the
Administration seek a legal opinion from the Department of
Law regarding this kind of disaster qualifying under Title
26? Ms. McConnell said the Department of Military and
Veterans Affairs worked very closely with them, because it
was important to establish to Washington D.C. that this was
a natural disaster. This disaster occurred with the help
of Mother Nature. The Department of Agriculture and
Department of Commerce did provide some aid and some
emergency money came from the Department of Agriculture.
Funds were also received under the Magnuson and Stevens
Act.
Co-chair Parnell asked how was it determined that this was
not a cyclical event of the fish. Ms. McConnell said it
would only have occurred if there was less than a fifty
percent drop of the fish. This however, was catastrophic;
more than fifty percent, indicating that it was not a
cyclical event.
Co-chair Parnell asked if Department of Fish and Game data
was being used. Ms. McConnell said the department had
provided the historical data.
Co-chair Parnell asked if there were written legal opinions
received regarding this matter? Ms. McConnell said she did
not think there was any specific written legal opinion.
He asked when did FEMA turn down the request. Ms.
McConnell does not remember the exact date. She did note
that regarding FEMA national and regional levels that they
were aware we were suffering catastrophically. Some agents
were sent and they were quite concerned about the situation
in Alaska. They were aware of the assistance being
provided by the U.S. Department of Agriculture. FEMA chose
not to get involved because the U.S. Department of
Agriculture and the U.S. Department of Commerce were
already involved. She referred to aid sought under the
Magnuson and Stevens Act.
(Tape #33, side A, at log 588 switched to side B at
approximately 9:55 a.m.)
Co-chair Parnell requested a copy of the FEMA letter which
turned down aid be provided to the committee. Ms.
McConnell said she would provide the requested document.
He asked when the assistance was provided under Magnuson
and Stevens Act.? Ms. McConnell said it was approximately
in October.
Co-chair Parnell asked why they were turned down then and
helped this year.
Ms. McConnell said the disaster last summer was more
catastrophic as compared to the prior year. This was by
very substantial amounts. Many more communities were hit
this year. There are not lots of alternatives in these
communities as to what one can do. They tried, for
instance, to hook individuals up to seafood processing
plants. However, when there are no fish, it affects all
phases. It was realized that if the appropriate action
were not taken this winter, individuals would have no
money for food and fuel. This would create more
emergencies later on down the line. Also, the winter has
been more severe than expected. Home aid, such as fuel,
has also been received.
Co-chair Parnell referred to $15 million for the disaster
relief fund and asked if these funds were used in the
western Alaska fisheries disaster. Ms. Carroll said all
the funds for this disaster were from the disaster relief
fund.
In response to Co-chair Parnell she said she did not
believe there was a cap on the disaster relief, however,
there was a procedure through the Legislature they followed
to request the funds from the general fund.
Ms. McConnell said previously there was a substantial
balance in the disaster fund. However, she was concerned
that prior disasters had not been properly cleaned up.
And therefore, the Legislature appropriated monies from
this disaster fund to complete cleaning up all the old
disasters. It had been their intention to return the
monies to this fund. However, since that had not been
done, they have been operating now without this pool of
money. Everyone knows that there are disasters that occur
every year. There is not even a place to go for small
disasters.
Co-chair Parnell voiced his concern for funding economic
disasters on down the road through this fund. Hundreds of
employees in his district were involved in the oil layoff.
Also timber employees. He said we had not done ourselves
any favors by using this mechanism to provide assistance.
He will work to revisit this situation.
Senator P. Kelly referred to the timber disaster in
Southeast Alaska. He voiced the same concern as Co-chair
Parnell. This situation would open an endless horizon of
funding opportunities in tough times. "What if this same
disaster occurs again this year?"
Ms. McConnell assured the committee they would not declare
disasters in the case of bad fish prices. She referred to
healthy severance packages of the oil companies. The same
was not done for State employees. On the other hand, the
fishing industry not able to claim unemployment insurance
as State workers and others could. She agreed that it was
appropriate to revisit how to address these situations.
She asked what about possible manmade disasters? How would
these be dealt with? These are all good questions and she
felt it appropriate to discuss what sort of precedent
should be developed. However, it was not clear how the
individuals in Western Alaska would get through the winter
if they did not receive help. The problems with the lack
of fish runs was very much caused by natural conditions.
These are policy issues made to be resolved.
Senator P. Kelly said the Legislature deserved some
culpability. They were informed. However, he was
concerned about what was going to be done next year. He
said the Secretary of the Interior wanted to shut down
Alaska. Manmade disasters, caused by environmentalists,
can shut down entire Southeast Alaska. Logs must be
imported into Alaska to build cabins because the
environmentalists had shut down logging in Alaska. He felt
they must be compassionate when individuals lose their jobs
and way of living in Alaska. Opportunities should not be
missed in the State to allow the forces of economics to
play out. If a region cannot support the local economy we
ca not keep holding these people up forever. Otherwise the
communities will continue in perpetuity to be dependent on
the State. He wondered what the strategy for next year
would be if this was still the case?
Ms. McConnell said she did not know what they would do if
this were still the case next year. They do not want to
see the economies collapse if the fish runs will improve
later; the same went for oil. They are trying to find
alternatives for the interim until things rebound. This
was important for rural as well as urban Alaska.
Senator Green referred to the general fund and Federal
funds. Was this all directed to one place? How was this
money distributed. Ms. Carroll said some was given to the
Department of Military and Veterans' Affairs. About one
hundred and six disaster centers were set up. These
allowed a grant of $1,500/individual and/or $5,000/family.
Other monies went to provide match for the Magnuson and
Stevens Act. Mental health grants and social service
grants were also provided. Fish were provided for three
communities that survived on subsistence.
Senator Green asked if there was a residency requirement?
Ms. Carroll said one had to be a resident of one of the one
hundred and six communities. The Small Business
Administration also provided some loans for permit holders.
The Federal government required that aid also be provided
to out-of-state workers. The $50 million received under
the Magnuson and Stevens act also required money be
provided equally to all.
Senator Green referred to missions and measures. She posed
the following questions. Did we have any substantial
measures to justify what has been done or the money that
has been spent? How many individuals have been assisted in
getting other jobs? What has happened to the money? How
many lives have been impacted and what has really happened?
She appreciated mental health assistance and counseling,
but they should not be a priority. Ms. McConnell advised
they knew exactly where the help went under the release
situation they provided. They know that the funds were
used exactly for basic emergency living situations. She
went on to explain that mental health assistance and
counseling was needed due to undue pressures. The
Department of Health and Social Services knew they would
need extra beds due to higher suicide rates in the villages
because of the economic pressures. Many negative things
become worse. She also cited assistance provided in foster
care.
Co-chair Parnell asked if this was paid from the department
or the disaster funds. Ms. McConnell said that if the
funds had been available within the department they would
not have had to use the money from the disaster relief
fund. Mental health services however, were provided under
disaster relief. This was not the first time these
services were provided in a disaster situation.
Senator Green asked specifically about the provision for
jobs. Would jobs be provided and would funds be used under
an economic planning grant. She wanted to know the results
of all these plans; how many were hired and how many
remained self-sustaining?
Ms. McConnell said they do have figures from this past
summer. Most of the jobs provided, however, were not
permanent, rather only seasonal. Many individuals had
preferred cash grants rather than construction jobs.
Co-chair Parnell explained for the benefit of the remaining
department heads that they could go if they were not needed
here.
Senator Leman referred to a letter last August outlining
the difference between the Legislature and the
Administration about the handling of this matter. He said
he made this statement in reference to Senator P. Kelly's
previous culpability comment.
Senator Leman asked for an explanation of the
$1,500/individual and $5,000/family comparison. Was this
money taxable? What amount of relief should actually been
given? What was the mechanism used for those years above
average for their repayment? It cannot be assumed every
year for low repayment. Ms. McConnell explained the
relationship between money provided and an individual's
income. There was a tighter relationship for those having
received assistance. All individuals were cross-checked
that they held a permit, were a crew member, or were a
cannery worker. The method required close restrictions on
a need for funds. Most individuals were already way below
the poverty level. These restrictions were even more
stringent than the Miller's Reach fire. Folks in urban
areas have an easier time finding replacement employment
even though it may be something they do not really want to
do. She also referred to left-outs. For example, those
handling cargo to move fish from the village were not
included to receive assistance.
Senator Leman asked if there had been a concerted effort to
correlate the amount of economic disaster with the disaster
to the crewmembers, permittees and cannery workers? Ms.
McConnell explained these three categories and how they
were rated. $1,500 was way under what individuals were
earning for a season's work.
Senator Leman asked if there had been any analysis done on
how individuals were impacted, i.e. the level of impact vs.
actual relief? Ms. McConnell said that not a single person
had received more aid than what their salary was. The
disadvantage was on the individual in the Western Alaska
Fisheries disaster. They had not abused this assistance.
Senator Leman asked if there should be a mechanism for
recovery? Ms. McConnell said nothing had been discussed
regarding this. Are they going to provide assistance to an
individual because they do not have fire insurance? Ms.
McConnell said there was no aid if the individual could
have provided for themselves through an insurance policy or
savings.
Co-chair Parnell advised the committee they would still
have further opportunity to discuss this matter with the
Office of Management and Budget.
Senator Torgerson felt they were missing the point of the
disaster. He referred to Senator Leman's suggestion on
repayment. In addition, he requested the most detailed
account as to how the monies were spent including the 1997
disaster. He asked if the $2.3 million dollar match was a
general fund match or community match? Ms. McConnell said
there were two parts to the match. $175,000 had been
shifted by the Legislature to match the loan process. The
second part of loan tried to get a match from the local
communities. Some communities, in fact, did provide a
match.
Senator Torgerson referred to documents regarding
flexibility in the programs. He had reviewed projects that
involved individuals in the 1997 disaster. Ms. McConnell
said they did make an effort under the Magnusson and
Stevens Act. Cash type of assistance was preferred,
however, the Feds preferred construction projects. These
were Federally funded projects. And since the Feds were
paying the lion's share for these projects they could place
their own restrictions and requirements. In further
explanation, a laundromat may not sound very important but
in individual villages this may be the only way for the
residents to have this facility. She also cited a road to
the garbage dumps.
(Tape # 34, side A, Log 000 at 10:40 a.m.)
Senator Torgerson continued. Asked the balance of projects
completed last year. Ms. McConnell said there were a
number of projects that were completed last year, however,
there were other projects that did not have a specific time
line. Therefore, they will continue in April for the
upcoming construction season.
Senator Torgerson asked about any EDA funds. Ms. McConnell
said these funds were included in the $50 million packet.
Senator Torgerson asked about the redistribution of monies
and asked for a copy and why it had been turned down by the
Magnusson and Stevens Act. Ms. McConnell said they worked
carefully with Senator Stevens regarding the monies.
Senator Torgerson asked if EDA funds could be used? Ms.
McConnell said she would look into this matter.
Senator Torgerson said he was interested in the communities
providing matching funds.
Co-chair Parnell said would take up the balance of the bill
on Wednesday or Friday.
Senator P. Kelly EDA mean? Senator Torgerson responded.
Ms. McConnell explained the procedure used to obtain
disaster funds. Payback must be ratified in the
Legislative process. They had been successful in getting
the Federal government to reimburse some of the monies to
the State. Technically, at this time, they have enough
Federal authority.
Co-chair Parnell.asked how much had been expended? Ms.
McConnell indicated approximately $8.5 for social
assistance. There still remained projects that would be
done this construction season.
Nico Bus, Department of Natural Resources was invited to
join the committee. He said $10.2 million had been
expended to the present time. This was from GF monies.
Senator Wilken was concerned with the language on the first
page of the bill. He reiterated Senator P. Kelly's
question of what do we do next year.
Mr. Bus responded to section 2 of the bill. This included
Western Alaska and Southeast storm requests.
Co-chair Parnell said he would take that matter up at the
next meeting.
Mr. Bus continued with section 3, fire suppression. He
said monies have been expended. Fire expenses vary over
the years. He noted the larger fires in Skagway and Tok.
For 1999 this was average. This summer fire season of May
and June looked more positive due to extreme snowfall over
the winter. He said they were hoping for a later fire
season this year.
Senator P. Kelly asked when an area caught on fire what was
priority rate? Mr. Bus said the State is rated for
priority. There was also a rating to just let a fire burn
itself out.
Co-chair Parnell thanked everyone for their participation
in the meeting. He briefly reviewed the agenda for
tomorrow.
ADJOURNMENT
Co-chair Parnell adjourned the meeting at approximately
10:55 a.m. (Tape #34, side A, log #240.)
SFC-99 (1) 2/22/99
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