Legislature(2001 - 2002)
03/27/2002 09:41 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
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MINUTES
SENATE FINANCE COMMITTEE
March 27, 2002
9:41 AM
TAPES
SFC-02 # 44, Side A
CALL TO ORDER
Co-Chair Dave Donley convened the meeting at approximately 9:41 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Loren Leman
Also Attending: NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public Facilities;
Attending via Teleconference: From Anchorage: JEFF JAHNKE, State
Forester, Division of Forestry, Department of Natural Resources
SUMMARY INFORMATION
SB 291-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
The Committee adopted a committee substitute, considered four
amendments and adopted one. The bill moved from Committee.
SENATE BILL NO. 291
"An Act making supplemental and other appropriations; amending
appropriations; and providing for an effective date."
Co-Chair Donley spoke to the proposed committee substitute. He
detailed the sections as follows.
Section 1: $6,829.77 GF to the Alaska Court System, Commission
on Judicial Conduct for FY 01 legal fees (this is the same
amount and funding source as contained in the original SB 291)
Section 2: (Section 2(a) of SB 291) $25,000 statutory
designated program receipts to the Alaska Science & Technology
Foundation for research contracts (this is the same amount and
funding source as contained in the original SB 291)
Section 3:(Section 3 of SB 291) $172,200 GF to the Department
of Corrections to replace failed water well and pump at the
Palmer Correctional Center (the funding source was changed
from Northern Tobacco Securitization Fund earnings to general
fund; the requested amount remains unchanged)
Section 4:(Section 4(a) of SB 291) Medicaid Services: The
total amount requested is included in the supplemental;
however, the allocation of funds was changed from the original
SB 291 as follows:
General Fund: $4,570,000 GF (down from $12,710,000 in SB 291);
Federal Funds: $114,760,500 (up from $106,618,000 in SB 291);
Statutory Designated Program Receipts: $23,903,300 SDPR (same
as requested in SB 291)
The general fund amount represents the actual general fund
match used to pay FY 01 claims. The balance of the GF in the
original SB 291 was an estimate of the match required for the
rest of FY 02. The department is working on strategies to
reduce the required GF match and a lower amount may be
possible. The total amount of spending authority covers
provider claims and allows the department to initiate the
"fair share" program for FY 02.
Section 5: $1,438,500 GF to the Alaska Marine Highway System
Fund (this is one-half of the amount requested in SB 291)
Section 6: (Section 7 of SB 291) Reappropriation of $310,100
from the Kalgin Island II, Caribou Hills, South Ninilchik-Dome
View and South Ninilchick Block timber sales in the Kenai
Peninsula now to be used for Kenai Peninsula Wildfire Risk.
Section 7: (Section 8 of SB 291) $25,000 to the Office of the
Governor, Division of Elections for costs of statewide primary
official election pamphlets.
Co-Chair Donley shared he had conversations with the Office of the
Governor regarding this item and he explained the new primary
election process and the need to educate voters. He noted an
initiate to change the primary election process would also be on
the primary election ballot.
Section 8: (Section 9(a) of SB 291) Appropriates 3.5% of the
PCE Endowment balance as of 2/1/01 for the FY 02 PCE program,
approximately $3,531,100. (This is one-half of what was in SB
291).
Section 9(a)(1) - 9(a)(4): (Section 10(a)(1) - 10(a)(4) of SB
291) $267,200 GF to pay for rental space and other costs for
four DOT&PF maintenance stations (these sections are the same
as contained in the original SB 291)
Section 10: $2,000,000 GF to the Department of Community and
Economic Development to be used as a grant to the Alaska
Travel Industry Association for marketing efforts to mitigate
the economic effects from the September 11, 2001 terrorist
attacks.
Section 11(a): Appropriates $800,000 University Receipts
(Natural Resources Fund) for the Lena Point Fisheries & Ocean
Sciences Facility (this is the same as contained in the
original SB 291)
Section 11(b): Renames the scope of the U of A Biomedical
Facilities/Classroom Renovations/Housing Safety Upgrades/Pool
Replacement to include HVAC Piping Replacement Phases 1-4
(this is the same as contained in the original SB 291)
Co-Chair Donley noted Section 11 (b) involves no additional funds,
but rather "expands the explanation" of how the funds could be
expended.
Section 12: Specifies that the appropriations to the Marine
Highway System Fund (Section 5) and the Power Cost
Equalization Fund (Section 8) are fund capitalizations and do
not lapse. Specifies that the appropriations to the Department
of Corrections (Section 3), Natural Resources (Section 6) and
University (Section 10(a)) are for capital projects and lapse
under AS 37.25.020.
General Funds = $8,479,700 (down from $19,848,400 in SB 291)
Federal Funds = $114,760,500 (up from $106,618,000 in SB 291)
Other Funds = $28,259,400 (down from $33,289,100 in SB 291)
Senator Ward moved for adoption of the CS SB 291 (FIN), 22-GS2102\L
as a working draft.
There was no objection and the committee substitute was ADOPTED as
a working draft.
Amendment #1: This conceptual amendment reads as follows.
Make the lapse date for Section 6 DEPARTMENT OF NATURAL
RESOURCES reappropriation for Kenai Peninsula wildfire risk
reduction June 30, 2004.
JUSTIFICATION: One of the concerns I've heard is that this
project needs to be accomplished timely. The lapse provision
under Section 12 is for the life of the project, meaning
(according to drafter George Utermohle) that if it takes the
department 20 years to do the project, then absent another
reappropriation of the same money, the project cold continue
until completed.
It is likely the department's intent to accomplish this
project quickly, and I'd like to augment that intent with a
specific lapse date to ensure the wildfire risk reduction is
accomplished soon.
Senator Ward moved for adoption of the amendment sponsored by
himself and Senator Leman.
Co-Chair Donley explained this amendment specifies a lapse date of
this appropriation.
AT EASE 9:47 AM / 9:47 AM
Senator Hoffman requested further explanation.
JEFF JAHNKE, State Forester, Division of Forestry, Department of
Natural Resources, testified via teleconference from Anchorage and
detailed the 1997 capital improvement project (CIP) appropriation
to undertake four large timber sales located on the Kenai
Peninsula. He furthered the Department sold approximately 14
million feet, but because of "drastic market changes" the remaining
three sales were no long marketable. At the same time, he noted,
efforts have been made by the Kenai Peninsula Borough to address
wildfire hazards caused by the Spruce Bark Beetle. He stated the
intent is to expend the balance of the CIP appropriation to better
address the wildfire hazard of areas near communities.
Senator Hoffman clarified the original appropriation related to
timber sales rather than primarily for fire suppression, although
the accomplishment is the same.
Mr. Jahnke affirmed and explained the intent is to "remove timber
where we can" through timber sales and at the same time provide
protection from wildfires to adjacent communities.
Without objection the amendment was ADOPTED.
Senator Hoffman commented on the importance of fully funding the
Power Cost Equalization (PCE) program, which is critical to rural
Alaska, as opposed to "piece-mealing and stringing along".
Amendment #2: This amendment inserts a new bill section on page 2,
following line 8 of the committee substitute to read as follows.
Section 5. POWER COST EQUALIZATION. (a) The sum of
$1,100,000 is appropriated from the general fund to the power
cost equalization and rural electric capitalization fund (AS
42.45.100).
(b) The sum of $1,100,000 is appropriated form the
power cost equalization and rural electric capitalization fund
(AS 42.45.100) to the Department of Community and Economic
Development for the power cost equalization program for the
fiscal year ending June 30, 2002.
Senator Hoffman moved for adoption and explained this appropriation
is to compensate for increased fuel costs. He pointed out these
funds are included in the Governor's proposed regular supplemental
budget and informed he would withdraw this amendment if it is the
Committee's intent to fund the increment in the later budget.
Co-Chair Donley expressed his intent to continue addressing the PCE
endowment fund and the PCE program to ensure success and self-
sufficiency. He qualified he was unable to "make an absolute
commitment at this time."
Senator Hoffman interjected the purpose of this amendment is
primarily to address increased fuel costs for multiple programs. He
asked if the intent is to fund these expenses in the regular
supplemental budget.
Co-Chair Donley responded the legislation before the Committee is
the fast track supplemental and noted it contains funding needed
immediately to keep programs operational. He anticipated further
discussions on these items in relation to the regular supplemental
budget.
Senator Hoffman commented that although this bill is titled "fast
track supplemental" this is the 73rd day of the legislative
session. He noted the FY 01 fast track supplemental had passed both
th
bodies and was transmitted to the Governor by the 40 legislative
day of the previous session.
Senator Hoffman WITHDREW his motion to adopt the amendment.
Amendment #3: This amendment inserts a new bill section on page 3
following line 20 of the committee substitute to read as follows.
Section 12. LEGISLATIVE COUNCIL. (a) The sum of $474,000
is appropriated from the general fund to the Legislative
Council for the Redistricting Board for operations for the
fiscal year ending June 30, 2002.
Senator Hoffman moved for adoption.
Senator Ward objected.
Senator Hoffman spoke to the motion, emphasizing the additional
work required of the Redistricting Board, given the Alaska Supreme
Court decision rejecting portions of the proposed redistricting
plan. He informed of the April 1, 2002 deadline to resubmit the
plan. Therefore, he asserted it is advisable to provide adequate
funds to perform these constitutionally mandated duties.
Senator Ward asked the amount of attorneys' fees and costs related
to the actions of the Redistricting Board that the state is
obligated to pay.
Senator Hoffman was unsure.
Co-Chair Donley detailed the efforts of the Redistricting Board
utilizing funds appropriated by the Legislature.
Co-Chair Donley shared that a letter was received from two members
of the Board suggesting that because the majority of the Board was
"so politically motivated and ruthless in their spending to reach
their partisan, political objectives in producing the first plan,"
additional funds should not be appropriated toward their efforts.
Co-Chair Donley surmised the letter indicated concerns about the
fiscal accountability of the Board. He remarked the Board had
already overspent the amount originally appropriated and had
requested authority from the Legislative Affairs Agency to expend
additional funds, and were denied that authority.
Co-Chair Donley noted the Board did not adopt a plan it had written
but rather adopted a plan from a "very partisan" outside
organization that was funded by anonymous donors. Because of this
"reckless, politically bias partisan behavior", he surmised the
state would probably be liable for over one million dollars in
public interest litigant fees for the groups who challenged the
plan and prevailed.
Co-Chair Donley informed that various methods to address
accountability are under consideration. He remarked the current
process is flawed because of the ability of the Board to expend
funds with a three-member vote. He stated this resulted in the
three appointees "of a particular political philosophy" able to
control the spending without consulting with the remaining two
members of the Board. He expressed that a method to require a four-
member vote to expend funds is being "explored" to ensure the
process is less partisan.
Co-Chair Donley shared the Senate Leadership is considering funding
a lesser amount using existing funds in the Legislative budget. He
admitted there is a need for travel and staffing, although he
pointed out the Board should have alternate redistricting plans on
hand and the entire amount requested would not be necessary.
Co-Chair Donley mentioned the Board held public hearings, and he
commented, "they chose to ignore most of the testimony."
Senator Ward maintained his objection to adoption of the amendment,
given Co-Chair Donley's comments. He asked if there is a record of
the amount of funds spent by corporations to influence the actions
of the Board.
Co-Chair Donley replied that a complaint was filed with the Alaska
Public Offices Commission (APOC) and the group subsequently
reported the sources of their contributions.
Senator Ward pointed out a list of individual contributors exists
but he emphasized that corporate entities are behind the individual
contributions. He spoke to the "outside interests influencing the
State of Alaska" and the undisclosed amount of money that was spent
by these entities. He questioned the public accountability and the
state's liability for the legal expenses.
Senator Hoffman agreed public process is necessary and he spoke to
the legislative action that restructured the appointment process of
the Redistricting Board. He noted this restructuring specified the
Board could take action through a simple majority vote. He
asserted, "We shouldn't be put into a position where after we don't
like the outcome that we need to change the rules."
Senator Ward qualified that when he voted for that legislation, he
did not anticipate the corporate effort to write a redistricting
plan, and present it for approval by three members of the Board
without public review or comment.
Co-Chair Donley clarified his earlier statements that he intended
to impose standards to improve the accountability of the Board's
expenditures by requiring at least four members' approval.
Senator Olson asked the approximate of funds the Board has spent to
date.
Co-Chair Donley said this figure would be provided. He understood
the original contract for attorney fees alone was between $400,000
and $500,000 and the Board also has three staff members, travel,
public meetings and other expenditures. He noted the request is for
an additional $200,000 for attorney fees and that additional funds
would be necessary for staffing, travel and public meetings. He
hoped the Board would author a new plan rather then allow an
outside entity submit one.
A roll call was taken on the motion.
IN FAVOR: Senator Hoffman and Senator Olson
OPPOSED: Senator Green, Senator Ward, Senator Wilken, Senator
Austerman and Co-Chair Donley
ABSENT: Senator Leman and Co-Chair Kelly
The motion FAILED (2-5-2)
The amendment FAILED to be adopted.
Amendment #4: This amendment changes the funding source from the
power cost equalization endowment fund to general funds in Section
8. POWER COST EQUALIZATION., on page 2, line 23 of the committee
substitute.
Senator Austerman voiced concern that the Power Cost Equalization
(PCE) endowment would continue to be spent down and he moved for
adoption of the amendment.
Senator Green objected.
Senator Ward asked if efforts have been made to secure funds other
than from the general fund.
Senator Austerman had not, but suggested there could be funds
available from through an Alaska Industrial Development and Export
Authority (AIDEA) dividend or from the Alaska Science and
Technology Foundation (ASTF).
Senator Ward noted he objected to the amendment but clarified if
another funding source were identified, he would support this
request. He stated he agrees with the intent of the amendment.
Senator Austerman replied that it was recognized when the PCE
endowment was created that it would not generate adequate income to
operate the program for a couple of years. He commented that
general funds are often appropriated for items that originally were
planned to be funded from other sources.
Senator Ward shared he knew of some possible alternative funding
sources for PCE that he would consider.
A roll call was taken on the motion.
IN FAVOR: Senator Hoffman, Senator Olson and Senator Austerman
OPPOSED: Senator Ward, Senator Wilken, Senator Green and Co-Chair
Donley
ABSENT: Senator Leman and Co-Chair Kelly
The motion FAILED (3-4-2)
The amendment FAILED to be adopted.
Senator Ward offered a motion to report CS SB 291 (FIN) from
Committee.
Senator Green referenced Section 9, relating to rental space and
costs associated with vacating current facilities for the
Department of Transportation and Public Facilities maintenance
stations, and asked if all the listed facilities were to be vacated
or whether some were "simply maintained".
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, that the
facilities have either been vacated or are in the process of being
vacated. She stated the Chandalar facility has actually been
demolished and that a temporary structure has been purchased and is
in use at that location. She continued that other locations have
been rented. She noted the Nome facility is the only facility still
occupied, as a new facility has not been located. She spoke to the
safety concerns related to the original facilities. She described
the conditions of the temporary facility in Willow, noting it has
no restroom.
Senator Wilken observed that the subject of PCE "has taken
considerable amount of time" in this Committee and he asked the
status of the acquisition of National Petroleum Reserve-Alaska
(NPRA) grants for the endowment.
Co-Chair Donley replied he did not expect an appropriation from
NPRA in the near future because of current federal requirements
that give priority to the requests of local communities.
Senator Olson noted the funds are utilized for other necessary
priority services such as public safety, water and sewer programs.
Senator Wilken asked if there has been interest from communities to
relinquish the funds for the "good of the PCE fund" and locate
funds elsewhere for those projects.
Senator Hoffman hypothesized if Fairbanks were allocated a certain
amount of funds each year, whether that community would forfeit
that money to the rest of the state when there are priority items
that are unattended in Fairbanks. He stressed the oil activities
have had substantial impact on the communities of the North Slope
and the NPRA grants are intended to offset those impacts. He
reminded of the $9 million these communities "gave up" at the
request of Senator Adams, which was a hardship because of the
identified need for $70 million for other projects.
Senator Wilken replied the question is irrelevant because Anchorage
and Fairbanks are not benefited from the PCE program. He countered
the NPRA funds are not currently used for public safety, water,
sewer, etc., but rather for "fluff" projects. He wanted to know if
these communities have been asked to forego the grants, because
Senator Adams had indicated they would be requested to do so to
benefit the PCE program. He stated this was a factor in the passage
of the legislation establishing the PCE endowment in 1999. He
suggested other revenue sources might be found for the local
projects and that if the communities were asked to relinquish the
grants, they might do so. He asserted, "A promise made is a debt
unpaid."
Senator Austerman commented he has taken a hard stand to
restructure the PCE program to be eventually self-sufficient. He
was unaware of the details of Senator Adam's commitment, as he was
not in the Senate at the time it was made. Senator Austerman
stressed however, that because of Senator Adam's efforts, $9.4
million NPRA funds were deposited into the PCE endowment. Senator
Austerman did not know whether the agreement included continuing
this annually.
Senator Austerman suggested accounting the NPRA funds to show how
much is available. He understood that because no new leases have
been granted and subsequently there is no new revenue for the NPRA,
only $1.2 to $1.5 million would annually be available for the
state. He remarked the NPRA grants are therefore inadequate to
"plug the PCE hole" and this debate could be irrelevant.
Senator Olson answered Senator Wilken's question, stating that he
did not know of any requests to communities to relinquish the NPRA
grants to the PCE endowment. He remarked it is inappropriate to
hold him accountable for the actions of his predecessor.
There was no objection and the bill MOVED from Committee.
Senator Ward shared that during the recent Department of
Administration budget subcommittee meeting, discussions were held
regarding prioritizing the activities of the Department. He stated
there had been miscommunications, resulting in an agreement to set
priorities for those efforts that are constitutionally mandated.
Co-Chair Donley responded to Senator Hoffman's comments about
whether Fairbanks would forego receiving funds allocated to it. Co-
Chair Donley informed this did occur in the form of a $50 million
transfer from the Railbelt Energy Fund.
Senator Hoffman remembered it as a one-time appropriation and that
the current situation would require communities to continually
relinquish fund on a long-term basis. He predicted this would not
gain approval from the affected communities.
ADJOURNMENT
Co-Chair Dave Donley adjourned the meeting at 10:28 AM
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