Legislature(1999 - 2000)
02/28/2000 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 28, 2000
9:00 AM
TAPES
SFC-00 # 39, Side A & B
CALL TO ORDER
Co-Chair Sean Parnell convened the meeting at approximately
9:00 AM
PRESENT Co-Chair Sean Parnell, Senator Al Adams, Senator
Lyda Green, Senator Loren Leman, Senator Gary Wilken, Co-
Chair Torgerson, Senator Phillips
Also Attending: NICO BUS, Administrative Services Manager,
Department of Military & Veterans Affairs; KENNETH
BISCHOFF, Director, Division of Administrative Services,
Department of Public Safety; LARRY PERSILY, Deputy
Commissioner, Officer of the Commissioner, Department of
Revenue; TAMAR DI FRANCO, Engineer Program Manager,
Division of Statewide Design & Engineering Services,
Department of Transportation & Public Facilities; NANCY
SLAGLE, Director, Division of Administrative Services,
Department of Transportation & Public Utilities; CATHERINE
REARDON, Director, Division of Occupational Licensing,
Department of Community & Economic Development.
Attending via Teleconference: JIM BUTCHART, Division of
Emergency Services, Department of Military & Veterans
Affairs, Anchorage; PAT PITNEY, Director, Budget
Development and Institutional Planning, University of
Alaska, Fairbanks; ANN RINGSTAD, Director, Government
Relations, University of Alaska, Fairbanks; RANDY SIMMONS,
Executive Director, Alaska Industrial Development & Export
Authority (AIDEA), Anchorage.
SUMMARY INFORMATION
SB 250-APPROPRIATIONS: CAPITAL/SUPP/REAPPROP
SENATE BILL NO. 250
"An Act making and amending capital, supplemental, and
other appropriations and reappropriations; making a
reappropriation under art. IX, sec. 17c, Constitution
of the State of Alaska, from the constitutional budget
reserve fund; making appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
DEPARTMENT OF MILITARY & VETERANS AFFAIRS
JIM BUTCHART, Division of Emergency Services, Department of
Military & Veterans Affairs testified via teleconference
from Anchorage with an assessment of damage from the
Central Gulf Coast storm. He noted that the division had
conducted all of the preliminary damage assessment in order
to quantify the size of this disaster. He mentioned
project work sheets as reflecting the finer points of
assessment. He pointed out that to date, public
assistance, individual costs and business losses totaled
about $30 million dollars, but added it is not certain how
much of this amount can be presently verified.
Co-Chair Parnell referred to business losses on the
provided spreadsheet [handout included in file] at $560,000
as being verified. He asked what types of losses these
were.
Mr. Butchart responded that this amount included two
businesses that were being shut down due to avalanches,
along with, power outages, road closures, etceteras.
Co-Chair Parnell asked if the division anticipated using
economic loss statutes for these damages or would these be
accounted for under the current, emergency disaster relief
statutes.
Mr. Butchart responded that many of these would be taken
care of by the Small Business Administration (SBA) since
the Administration issued a disaster declaration last week.
Co-Chair Parnell asked how much of the $27 million, would
the division anticipate being covered by the federal
government.
Mr. Butchart responded that this was a 75/25 percent split,
if the entire $27 million was verified. He explained that
it was uncertain whether the federal government would cover
the Alaska Railroad Goldstreak spill.
Co-Chair Torgerson asked if the division anticipates that
the railroad might make their own match.
Mr. Butchart responded that this was presently unknown.
Co-Chair Torgerson noted that part of the declaration he
wished included would cover the expected Spring flooding
which will probably take place in many areas, especially in
Seward.
Mr. Butchart responded that the disaster is closed out as
of the 23rd of February. He continued that if substantial
spring flooding results, the division would have to
consider this as an additional disaster.
Co-Chair Torgerson referred to total of $568,000 due to
business losses, and noted that he knew of at least three
businesses that had caved in. He wondered if these
businesses would only be allowed an SBA loan.
Mr. Butchart responded that this might not be the only loan
these businesses are eligible for, but also Federal
Emergency Management Agency (FEMA) funds.
Co-Chair Torgerson asked if there would be any general fund
monies passed down to businesses.
Mr. Butchart responded that the majority of the FEMA funds,
reduced to a 25(non-federal)/75(federal) split might also
be applied.
Co-Chair Torgerson asked when the division would know from
the federal government what costs out of the $27 million
will be verified.
Mr. Butchart responded that this process could take a
couple of months.
Co-Chair Torgerson asked if the homes lost to the slide in
Cordova would be rebuilt in the same location.
Mr. Butchart responded that this issue is presently being
addressed and Cordova has a temporary zoning ordinance in
place, which would prohibit residents from rebuilding in
this area. He mentioned a program called Hazard Mitigation
that might be made available to move these homes instead.
National Missile Defense Project - $24,200 General Funds
NICO BUS, Administrative Services Manager, Department of
Military & Veterans Affairs and Department of Natural
Resources noted that these monies would go toward the
National Missile Defense Project in order to fund travel
for the Commissioner and the General of the Army Guard to
attend various meetings around the nation. He continued
that this missile project could bring substantial
construction revenue and federal jobs into the state. He
pointed out that this request did not compromise a lot of
money, and that the Commissioner's office previously did
take a $87,000 reduction in unallocated funds.
Air Guard Crash Rescue Firefighters - $212,400 Federal
Receipts
Mr. Bus continued that this program was totally federally
funded and that this supplemental would essentially augment
the vacancy rate and buy station supplies, clothing and
equipment as authorized.
Alaska Military Youth Academy - $582,100 Federal Receipts
Mr. Bus outlined that the department received these funds
in October for two classes with 80 graduates in each. He
essentially outlined the information found in the backup
that, the Alaska Military Youth Academy chose to take this
one-time increase to enroll more students and reduce the
waiting list. He additionally noted that, the decision to
receive this money was due to the prospect of receiving
Reimbursable Service Agreement (RSA) funds from Department
of Education and Early Development, Alyeska Correspondence
School, which could be used as a state match. He concluded
that this funding was included in the Governor's State
Fiscal Year 2001 budget request.
Alaska Military Youth Academy - $110,5000 Statutory
Designated Program Receipts
Mr. Bus continued that these monies related to the
Municipality of Anchorage's job-training program. He noted
that Anchorage and the Department entered into a Memorandum
of Understanding for the Alaska Military Youth Academy to
help with this job-training program. He added that
Anchorage will pay $110,500 for this collaboration.
DEPARTMENT OF NATURAL RESOURCES
Fire Suppression - $6,415,100 General Funds
Mr. Bus outlined that this was the amount of money spent
this last summer, not including funds for fire suppression
in April, May and June, concluding that this supplemental
would cover costs to date, plus fixed costs [inaudible.]
Division of Parks and Outdoor Recreation - $200,000 Program
Receipts
Mr. Bus stated that these funds would enable this division
to address upgrading of their outhouse facilities. He
noted that the anticipated revenue for this division in the
present fiscal year reflects an excess receipt total of
$200,000.
Fairbanks Facility Heating Oil - $2,506.40 [Fund Source Not
Specified]
Mr. Bus noted that the Fuel Company supplying oil to this
facility went bankrupt and just recently submitted a bill
from 1996.
Ratification Fire Suppression Expenditures - $3,863,700
General Fund & Federal Receipts
Mr. Miko concluded that this ratification consisted of fire
suppression costs for May and June activities expended for
last year.
DEPARTMENT OF PUBLIC SAFETY
Fish & Wildlife Protection Receipts - [Transfer
Authorization from ADF&G
KENNETH BISCHOFF, Director, Division of Administrative
Services, Department of Public Safety noted that the
department had two sections in SB 250, the first of these
being Section 14. He noted that this first section
involved a modification to front section language that
allows the department, along with the Department of Law to
access Department of Fish and Game funds. He added that
these funds were transferred from Criminal Crimes and
Forfeitures. He continued that the original language
submitted to the legislature was too restrictive, since it
only allowed for back section appropriations to tap the
current year transfers. He continued that this year there
is about a $300,000 shortfall and noted that the present
modification would allow the department to access the Fish
and Game funds as outlined.
Fuel Bill $6,869.97 - General Fund
Mr. Bischoff continued to note Section 21 of SB 250, which
itemized the amount of $6,869.97 for a fuel bill.
DEPARTMENT OF REVENUE
Oil and Gas Audit - $150,000,
And Child Support Enforcement, $150,000 General Funds
LARRY PERSILY, Deputy Commissioner, Office of he
Commissioner, Department of Revenue noted that the
department had two supplemental requests before the
Committee. He noted that one of these was for the tax
division, to pay the state's cost in defending itself to a
challenge a property tax assessment from the Kaparuk and
Prudoe Bay operators in the amount of $150,000. He added
that the other supplemental was for the Child Support and
Enforcement Division for a one-year project for temporary
workers to process an accounting backlog in the amount of
$150,000 from program receipts.
Senator Phillips inquired about this accounting backlog.
Mr. Persily responded that the Child Support and
Enforcement Division oversees several thousand cases that
need accounting adjustments, such as visitation credits,
medical insurance credits, etceteras. He felt as though
the division could process 600 of these per month and
within a year complete the backlog.
Co-Chair Parnell referred to the backup related to the Oil
and Gas Audit Division and specifically noted that the
related dispute could cost the State of Alaska $12 million
a year in lost property tax revenue. He asked if the North
Slope Borough was financially participating in this
challenge.
Mr. Persily responded affirmatively and stated that each
entity, the state and the borough have been in negotiations
with Arco and British Petroleum. He added that the
Department of Revenue thought it important to have their
own experts and research conducted since the state
ultimately sets the property tax assessment.
DEPARTMENT OF TRANSPORTATION
Central Region Design & Engineering - $80,000 Program
Receipts
TAMAR DI FRANCO, Engineer Program Manager, Division of
Statewide Design and Engineering Services, Department of
Transportation & Public Facilities stated that the division
requests this money since the Central region offices has
already spent their allocated receipts for the year. She
declared that this money is used to cover sign, driveway or
any type of fees that are used for maintenance of the
state's right-of-way responsibilities.
Senator Phillips asked if the fees cover expenses.
Ms. Di Franco responded that she could not give a precise
answer to this question. She added that the department is
in the process of reviewing these fees in order to make
sure that the cost of doing business does equal the fees
that are charged.
Alaska Marine Highway System - $500,000 General Funds
NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation & Public Utilities
noted that this past year has seen record increases for the
price of oil. She commented that this has meant an
increase in fuel prices for the Marine Highway System and
noted that last year the department paid about $.39 per
gallon for fuel. She added that the department currently
pays about $.83 per gallon. She declared that even though
the department tried to allow for fuel increases, these
became more inflated than anticipated. She explained that
as a result of this increase, the department has had to cut
back on service, but they do not feel as though they can
discontinue this service anymore.
Co-Chair Parnell asked if there was a "carry forward"
budget for the Marine Highway System Fund for FY99.
Ms. Slagle responded that there was a balance in the Marine
Highway Fund, but she did not have this figure in front of
her. She thought that this amount was about $27 million.
Senator Leman asked what the cost per gallon figure was
used to develop the FY00 budget.
Ms. Slagle responded that she was not sure exactly, but
that she would provide this information to him.
Northern Region Hwy & Aviation - $375,000 General Funds
Northern Region Facilities - $25,000 General Funds
Ms. Slagle continued to outline two additional requests
from the department, the first for the Northern Region
related to winter storm damage to highways and aviation
work and the second, related to a storm-damaged facility.
She noted that these costs were submitted when the Disaster
Declaration was released, but the department does not know
at this time whether these costs will be covered by this
declaration.
Co-Chair Parnell noted the estimated costs for disaster
relief outlined in a spreadsheet showing the Department of
Transportation & Public Facilities cost of $865,000. He
wondered why there was a discrepancy in these numbers.
Ms. Slagle responded that these were preliminary dollar
amounts when the department submitted these to the Office
of Management and Budget. She hoped that in the next week
these estimates will be more firm, since at this time it is
unclear what the federal government will cover. She stated
that the department requires $900,000 for the Anchorage
International Airport baggage handling system. She
continued that this was an amendment to the original
request and noted that this money would be used for traffic
control while this baggage system is under construction as
an operating expense.
Co-Chair Parnell called an at ease at 9:25 AM and
reconvened at 9:35 AM.
UNIVERSITY OF ALASKA
Planning & Design University Museum - $500,000 Federal
Funds & $500,000 University Receipts
PAT PITNEY, Director, Budget Development and Institutional
Planning, University of Alaska testified via teleconference
from Fairbanks. She stated that the University was asking
for funds related to continued planning and design for the
University of Alaska Museum.
Co-Chair Parnell asked what the urgency was for getting
this appropriation into the supplemental.
Ms. Pitney responded that these funds come in through the
foundation and the University would like to continue with
the planning and design process.
Co-Chair Parnell asked if planning and design would stop if
this project did not get funded before June 30th.
Ms. Pitney responded that this project needs to be funded
this fiscal year for planning and design to continue. She
noted that this project was presently at a standstill.
Telecommunications Payments $100,000 - [No Fund Source
Given]
Ms. Pitney added that the University had two additional
requests, the first for Claims and Judgments and another
for $100,000. She specified that the University was
presently working on a request from Office of Management
and Budget to cover some telecommunications payments for
Satellite Three-Interconnect Project for this $100,000.
Claims & Judgments - [Dollar Amount not given]
ANN RINGSTAD, Director, Government Relations, University of
Alaska testified via teleconference from Fairbanks referred
to backup submitted to the Committee that dealt with
Judgment and Claims. She noted that these monies were over
and above what the University and insurance has paid out of
pocket for the [inaudible] Settlement.
Co-Chair Torgerson responded that he had read an article
that the University would cover these costs themselves.
Ms. Ringstad responded that the University has come up with
a certain portion of this, but as per an agreement with the
legislature regarding insurance, this is why the University
has submitted a supplemental request.
Co-Chair Parnell called for an at ease at 10:50 AM and
reconvened at 10:53 AM.
DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT
Power Cost Equalization - $8 million AIDEA Dividend
RANDY SIMMONS, Executive Director, Alaska Industrial
Development & Export Authority (AIDEA) testified by
teleconference from Anchorage. He noted the supplemental
request before the Committee regarding Power Cost
Equalization (PCE) in the amount of $8 million. He noted
that for FY00 funding, the department was expected to have
around $7.9 million consisting of carryover funds from
FY99. He continued that 60 percent of this was
[indiscernible] revenues with some interest income, with
the remaining FY00 [indiscernible] revenue which was
suppose to come from SERA. He added that the department
estimates about $7.8 million came from this same source and
noted that any money coming from this source was highly
questionable. He remarked that they propose to use an
AIDEA dividend for FY00, as a supplemental of $8 million.
Mr. Simmons continued that last year in Senate Finance, the
department discussed AIDEA's FY00 dividend and this year a
new accounting rule came into affect which makes this
recognized income before it is realized. He continued that
this meant about $7.7 million of unrealized income, but the
department had not taken this into account when looking at
this dividend because the department was being fairly
conservative. Mr. Simmons went into specific detail about
the department's policy decisions in light of this new
money and basically summed up that available monies will
run out in March. He noted that the request for a
supplemental will carry the department through FY00 at the
target amount set by the legislature last year, which is
$15.7 million.
Co-Chair Parnell asked if a larger dividend could be
expected in the future.
Mr. Simmons responded that for FY00 and FY01 the department
went for the larger, maximum statutory amount at 50
percent. He noted that for the next few years, the
department will probably make a recommendation to the board
making this 50 percent of the department's net income. He
then gave background as to this rational.
Senator Adams commented that at the end of last session, he
recommended that this $8 million should go toward to (PCE.)
He noted that then, but the department said this would hurt
their bond rating. He wished to know if this was still the
case.
Mr. Simmons responded that these were two different
situations. He continued that another $8 million, as
discussed, were revenues generated from Red-Dog, which go
to PCE. He continued that this present proposal would make
available dividends declared by the board and then the
legislature can appropriate this money as they see fit.
Senator Adams asked if the department would oppose an
amendment to read that these revenues should go to PCE.
Mr. Simmons responded that the department would oppose this
and gave his reasoning as to why.
Tape: SFC - 00 #39, Side B, 9:57 AM
Senator Adams asked if AIDEA or its board of directors
could ever sell a project such as Red-Dog to a local
entity.
Mr. Simmons noted that as long as they sold it to a
governmental entity, then the bond could stay tax exempt.
Occupational Licensing - $450,000 General Fund & Program
Receipts
CATHERINE REARDON, Director, Division of Occupational
Licensing, Department of Community & Economic Development
stated that 100 percent of this supplemental would be
funded by license fees, which her department has already
collected. She noted that of this total, $50,000 would be
used for prosecution of a [indiscernible] case involving a
physician's license and 30 related complaints. She added
that this amount would effectively cover any legal costs.
She commented that the remaining $400,000 would allow the
division to continue operating.
Ms. Reardon declared that the division's supplemental,
amends front section language of the bill, since the
division's FY00 numbers section was removed from the budget
except for interagency receipts. She stated that this
front language section has become such a large part of the
division's budget. She added that both the House and
Senate version of this language would have not presented a
problem to the division, but in Conference Committee a cap
on the total amount of roll forward for excess collections
that could be spent was established. She continued that
this cap was to reduce by $400,000 what the division could
spend over FY99. She noted that there was not enough time
to discuss with the legislature what the impact of this
action would be and it also was not 100 percent clear that
this reduction was intended. She affirmed that if the
division's present supplemental is not approved, or the
amendment to front section language is not approved, the
division will be in a grave situation which could mean that
they would have to close down their offices for the month
of June. She asked the Committee that if they had intended
a $400,000 cut to the division's expenditures for FY99, she
asked that the Committee fund the requested supplemental
and make it very clear in the budget process for FY01. She
would then make the necessary reductions, which would be a
very substantial impact to the division.
Co-Chair Torgerson commented that the Committee had not cut
the division's budget and the Committee gave the division
what was requested. He added that the division may have
miscalculated and he understood the division had increased
their fees, which accounts for the extra $400,000 that
could be included in their budget.
Ms. Reardon stated that it was true that the maximum figure
allowed for FY00 was the figure in the Governor's budget
request. She added that the Governor's budget had open
roll forward language in the front section and for the last
several years, since FY96, a good portion of the division's
expenditure authority was included in this language. She
went on to explain the specific details regarding the
ramifications of the language and outlined the division's
fee schedule for licensing.
Co-Chair Torgerson commented that the legislature would
like to be involved in the discussions regarding increases
in fees. He added that the legislature would not give the
division a blank check.
Ms. Reardon reiterated her feelings on the front section
language of the budget.
Senator Leman asked about the increased fees of engineer
licenses. He also asked why the division used a Seattle
mailbox to receive these same fees.
Ms. Reardon responded that she would research this
situation. She explained that the renewal forms for
business licenses came with an enclosed Seattle addressed
envelope. She noted that a "lock box" is used for this
procedure and the Department of Revenue has a contract with
banks to process this paperwork. She continued that these
banks will open the envelops, deposit the checks and run
coupons through machines which generates an electronic
transfer every day that highlights the collected fees. She
noted that Key Bank has always had this contract, but sub-
contracted to a Seattle firm to help with this outlined
procedure.
ADJOURNED
Senator Parnell adjourned the meeting at 10:30 AM.
SFC-00 (1) 02/28/00
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