Legislature(2003 - 2004)
03/24/2003 10:07 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 24, 2003
10:07 AM
TAPES
SFC-03 # 28, Side A
SFC 03 # 28, Side B
SFC 03 # 27, Side A*
*Audio recording of this meeting begins with tape SFC-03 #28 and
continues with tape SFC-03 #27
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 10:07
AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice Chair
Senator Ben Stevens
Senator Donny Olson
Also Attending: SUSAN TAYLOR, Director, Division of Administrative
Services, Department of Revenue; DAN SPENCER, Director, Division of
Administrative Services, Department of Administration; KIM GARNERO,
Director, Division of Finance, Department of Administration; TOM
LAWSON, Director, Division of Administrative Services, Department
of Community and Economic Development;
Attending via Teleconference: From Anchorage: JOHN MALLONEE, Data
Processing Manager, Child Support Enforcement Division, Department
of Revenue; MIKE MORA, Common Carrier Specialist, and Project
Manager, Regulatory Commission of Alaska; GENE KANE, Director,
Department of Community and Economic Development; From off net
locations: JULIE STINSON, Department of Administration; MIKE
HARPER, Deputy Director, Rural Energy, Alaska Industry Development
and Export Authority; From Fairbanks: JO GROVE, Grants Manager,
Division of Community and Business Development, Department of
Community and Economic Development
SUMMARY INFORMATION
SB 100-APPROP: CAPITAL PROJECTS
The Committee heard from the Department of Revenue, the Department
of Administration, and the Department of Community and Economic
Development. The bill was held in Committee.
[Note: Audio recording of this meeting begins with tape SFC-03 #28
and continues with tape SFC-03 #27.]
SENATE BILL NO. 100
"An Act making capital appropriations and reappropriations;
capitalizing a fund; making 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."
The Committee heard overviews of the departmental budget requests.
Department of Revenue
Child Support Enforcement Case File Imaging Project
$363,800 federal receipts
$187,410 receipt supported services
Reference No.: 37886
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
State Match Required
Phased Project
This is a project to provide paperless case files to be used
for child support cases. All information regarding cases
including support orders from the court, correspondence, forms
applications, etc., are currently in over 48,000 paper files.
A file center staff of 3 full time employees is devoted to
delivering them to caseworkers as requested, retrieving,
updating and re-filing. As the number of documents that are
handled by CSED grows over the coming years, the ability to
create imaged files instead of paper files will greatly
increase the efficiency of the caseworkers, accounting and
audit staff and will also allow file center personnel to be
reallocated to provide even more client service.
SUSAN TAYLOR, Director, Division of Administrative Services,
Department of Revenue, testified this request would fund the first
of two phases of the project.
Co-Chair Wilken asked the source of the receipt-supported services.
JOHN MALLONEE, Data Processing Manager, Child Support Enforcement
Division, Department of Revenue, testified via teleconference from
Anchorage that the funds are "the money that we collect back that
are reimbursements for public assistance that was paid out
previously."
Senator Olson asked if other departments had undertaken imaging
projects that could be reviewed to determine the benefits of such
an undertaking.
Ms. Taylor stated she would survey other departments and report to
the Committee.
Child Support Enforcement Computer Replacement Project -
Phase 4
$269,300 federal receipts
$35,700 receipt supported services
Reference No.: 37810
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
State Match Required
Phased Project
This is a continuation of the computer and printer replacement
project initiated in FY 00. The agency objective is to replace
personal computers, printer and servers that have exceeded
their useful life. With 250 computers in use in the Division,
we have at least 60 computers in that situation, as well as
several network and mainframe printers and two servers.
The funding for this project includes one-time excess federal
funding of $200,000 derived from FY 02 and FY 03 Alaska Court
System expense reimbursement.
Ms. Taylor informed that it is no longer economical to repair the
existing equipment.
Senator Olson asked when the computers were replaced last.
Ms. Taylor informed that some of the computers are over eight years
old. She was unsure the best practices for replacing the units, but
estimated four to five years was preferable.
Department of Administration
Payroll and Accounting Systems Replacement Analysis
$400,000 general funds
Reference No.: 37950
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2004
Phased Project
Funding will be used to continue replacement analysis and
planning for the statewide accounting and payroll systems
(AKSAS and AKPAY) currently managed by the Division of
Finance.
DAN SPENCER, Director, Division of Administrative Services,
Department of Administration, introduced Ms. Garnero.
KIM GARNERO, Director, Division of Finance, Department of
Administration read a statement relating to this request into the
record as follows.
The Division of Finance is currently leading a project to
assess our statewide administrative systems and plan for their
eventual replacement. This analysis is well underway with a
multi-department steering committee overseeing the project.
We're developing a business case, which will analyze various
possible solutions and their total costs of ownership. These
options will be presented to policy makers for a decision on
how to proceed.
At the same time, we're compiling business requirements, which
any selected solution will have to meet. Both of these
products are scheduled for completion July 1. The $400,000
request before you today will be used to administer an rfp
[request for proposals] and conduct subsequent contract
negotiations with the resulting vendors. The rfp and contract
negotiations are critical paths, which will determine the
overall replacement cost and ongoing maintenance of the
selected solution.
Shortcomings of these tasks could cost the State millions over
the long terms. For perspective, our current statewide
accounting system is 18 years old and costs $15 million to
implement in the early 1980s.
Our intent is to bring to you a funding request for the
selected solution during the next legislative session. We're
currently planning status meetings on this project for our
users in mid April and I'd like to invite any interested
legislators or their staff to attend one of these meetings.
Co-Chair Wilken asked how the $600,000 appropriated in the current
fiscal year has been expended.
Ms. Garnero told of a nationwide firm, Maximus, that "specializes
in serving government" contracted to assist in developing the
"business case and our business requirements", which would be
completed July 1, 2003. She added that some of the funds would also
be utilized for travel to Anchorage and Fairbanks for the
aforementioned April meetings.
Co-Chair Wilken asked how the $400,000 requested in this item would
be used to continue the process.
Ms. Garnero replied this would allow the Department to continue its
relationship with Maximus to administer the rfp and assist in
contract negotiations. She stressed the rfp is a complicated
procurement and that the State would be "ill-advised" to undertake
without professional consulting.
Co-Chair Wilken asked if a total of $1 million appropriated over
two fiscal years would result in a "structure" to go out to bid.
Ms. Garnero explained that a solution would be selected and a
contract negotiated.
Co-Chair Wilken asked whether the State would purchase a new
accounting system.
Mr. Spencer clarified that these efforts would determine whether it
is preferable to purchase a prepared system or create one in-house.
Co-Chair Wilken asked the estimated cost of a payroll accounting
system for the State.
Ms. Garnero replied that other states have purchased systems for
between $20 million and $250 million, the amount appropriated by
the State of Pennsylvania. She assured the intent is to expend less
than the maximum amount.
Co-Chair Wilken asked the savings realized by the State by such a
purchase and whether staff reductions or other efficiencies would
occur.
Ms. Garnero responded that such savings is not known at this point.
She stated that analysis of the requirements to "do business" is
underway and she anticipated that the question of savings would be
considered in determining the solution.
Co-Chair Wilken asked if the solution posed to the legislature
would include information on the potential savings.
Ms. Garnero remarked that "hard savings" would be difficult to
measure. She reiterated the existing system was purchased in 1985
and she spoke to the maintenance expenses of this system. She noted
that licensing and maintenance of a new system would surpass the
current expenditures.
Co-Chair Wilken qualified that a definitive amount is not
necessary, but rather requested a range of the estimated expense.
Co-Chair Green suggested the question could rather be the
consequences of not making this purchase.
Ms. Garnero spoke of the limited use of the existing system and
that the payroll system is the "driving force" to streamline data
processing for the State.
Co-Chair Wilken reminded of conversations on this matter the
previous year and stressed that the Committee must be "comfortable"
with the proposed solution before the significant appropriation
could be made. He therefore encouraged the Department to "burden"
the Committee with analysis and information.
Labor Contract Negotiations Support
$250,000 general funds
Reference No.: 38476
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2005
One-time Project
Funding will be used for labor contract negotiations.
Mr. Spencer informed that tentative agreements for one-year
contract extensions have been reached with all but two bargaining
units, but that longer-term agreements must still be reached.
Co-Chair Wilken noted the $330,000 appropriation of the current
fiscal year has resulted in the one-year contract extensions.
Mr. Spencer affirmed and expressed he would research whether an
unexpended balance of that appropriation remains.
Co-Chair Green asked if funding for this purpose is always a
capital expenditure.
Co-Chair Wilken understood this request is for "support".
Mr. Spencer affirmed and furthered that this is not an ongoing
expense, but rather a specific project that would have a finite
end, and therefore should not be "buried" in the operating budget.
He noted that this funding had been included in an operating budget
several years ago, but that concerns arose about the appropriation
lapsing at the end of the negotiations.
Co-Chair Green asked whether a period of time would elapse between
these negotiations and the beginning of the negotiations for long-
term contracts.
Mr. Spencer responded that the next negotiations would begin in
July 2003. He spoke of the lengthy process involved in reaching
agreements.
Co-Chair Wilken asked if the negotiations must begin again shortly
because the current agreements are one-year contracts.
Senator B. Stevens asked if the contracts for all 12 bargaining
units are one year.
Mr. Spencer answered yes.
Senator B. Stevens asked if the negotiations must therefore begin
anew.
Mr. Spencer affirmed and explained the timeframe of the new
gubernatorial administration, and the statutory requirement that
the governor must submit negotiated contracts to the legislature by
the 60th day of the legislative session. Because of the limited
time, he stated the decision was made to negotiate one year
contracts to allow further review of the matter before longer
agreements were negotiated.
Senator B. Stevens surmised the strategy would begin negotiations
on July 1, 2003, rather than December 1, 2002.
Mr. Spencer informed that Governor Murkowski began contract
negotiations immediately upon taking office. However, given the
complexities, he said it was determined that additional time was
necessary to negotiate longer-term agreements.
Senator B. Stevens asked the number of labor negotiations
administered by the Department of Administration.
Mr. Spencer answered 13 or 14.
Senator B. Stevens asked if 90 percent of the labor contracts are
on the same cycle.
Mr. Spencer replied that the previous administration negotiated
bargaining unit contracts so all would be on the same cycle. He
noted the benefits of undertaking all negotiations at one time.
License Plates, Tabs and Manuals
$400,000 receipt supported services
Reference No.: 37942
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2004
On-going Project
Funding will provide for the purchase of license plates and
tabs to maintain necessary statewide inventory levels.
Mr. Spencer noted this item has historically been included in both
the operating capital budgets. He stated the Division of Motor
Vehicles is required to have license plates, training manuals,
decals, etc. He listed the Division annually expends between
$200,000 and $300,000 for these items.
Co-Chair Wilken asked whether unexpended funds appropriated for the
current fiscal year could be lapsed and utilized for the upcoming
fiscal year expenses.
Mr. Spencer answered that because it was a capital appropriation,
any unexpended funds could not be lapsed. He explained the
expenditures occur on a calendar year basis, rather than a fiscal
year basis, with a surge of business occurring during the summer
months. He said the Division attempts to control inventory, yet
retain an adequate supply.
Co-Chair Wilken asked why this item is not currently included in
the operating budget.
Mr. Spencer responded that the previous time this item was included
in the operating budget, it appeared to be a funding increase and
therefore the legislature transferred the item to the capital
budget.
Payroll and Accounting Systems Replacement Analysis
Reference No.: 37950 (continued)
Senator B. Stevens noted the existing consulting contract with
Maximus and asked whether this company is a potential bidder on the
new system.
Mr. Spencer answered it is not and that this company only provides
consulting services. He informed that the State also entered into a
separate contract agreement with another division of the Maximus
company to advise on federal cost allocation plans. He emphasized
this company does not write operating systems. He assured the
Department is careful to not procure advice from entities that
could subsequently bid on the projects they provide advise for.
Senator B. Stevens asked the percentage of the system's operations
that are for payroll operations. He questioned whether the
Department is attempting to replace the entire system when only the
payroll portion is obsolete. He requested the Department provide
further information on this matter.
Mr. Spencer indicated Ms. Garnero would research the matter.
Alaska Land Mobile Radio
$680,000 general funds
Reference No.: 37949
Category: Development
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2006
Phased-underway Project
Funding will be used to continue the process of converting
Federal, State, and local emergency communications systems to
technology that will provide for interoperability (the ability
of different agencies with different communications systems to
communicate across jurisdictions and with each other.)
Mr. Spencer explained that the Department does not have adequate
funding from receipt authority funds for this project. He reminded
that this project has been before the legislature for several
years. He told of efforts of Alaska's congressional delegation to
secure federal appropriations. He stated the requested funds would
be utilized to complete the first phase of the project.
Mr. Spencer spoke of a concept demonstration recently conducted in
Valdez, which was successful.
Senator Bunde relayed criticisms that this project would create a
significant unfounded mandate for local governments, by requiring
the purchase of new equipment, when less expensive options were
available.
JULIE STINSON, Department of Administration testified via
teleconference from an off-net location that the system would be
constructed utilizing State and U.S. Department of Defense funding.
She assured this project would not create a mandate but is rather
intended to support existing systems, although local governments
could purchase new equipment that would fully utilize the services
available.
Ms. Stinson furthered that this Alaska Land Mobile Radio (ALMR)
project would utilize standard-based technology and would encourage
other manufacturers to produce equipment compatible to this
standard.
Senator Bunde noted the system would exist, although municipalities
would be required to purchase new radios to fully utilize the
system.
Ms. Stinson corrected that other radio systems could be interfaced
with the new system. She qualified that all features would not be
available and that dispatch would be necessary.
Senator Bunde and Ms. Stinson continued to debate the requirements
of local governments to participate in the new system.
Ms. Stinson noted new radios would cost between $2000 and $4000 per
unit depending upon the features desired.
Senator Olson asked about the cost of interfacing with the systems.
Ms. Stinson surmised a memo of understanding would be signed based
on interface needs. She furthered that equipment could be purchased
by local governments through State procurement contracts at bulk
rate prices.
Senator Olson restated his question about operating expenses for
municipalities.
Ms. Stinson noted some discussion of user fees have been held for
operation and maintenance of the system, and although she did not
know the exact amount, she predicted it would be minimal.
Senator Bunde reiterated this would be considered an unfunded
mandate by municipalities and expected that additional operating
expenses would be incurred.
Senator Olson asked the cost to the State if the ALMR project were
not funded.
Ms. Stinson did not know and would research the matter through an
engineering firm working on the project.
Co-Chair Wilken understood the current system would be utilized,
although communication between the various emergency groups would
not be available.
Ms. Stinson corrected that the aging system would eventually
require replacement. She noted that replacement equipment could no
longer be purchased for the system currently utilized by the
Department of Transportation and Public Facilities.
Co-Chair Wilken asked the definition of "standards based
communications".
Ms. Stinson told of the multiple types of communication equipment
that had been purchased separately and subsequently were not
compatible with each other. She stated the intent is that
manufactures would design and construct equipment according to a
standard to ensure compatibility.
Co-Chair Wilken next referenced federal funding received in
previous years, but noted the proposed FY 04 budget does not
contain a request to receive and expend such funds.
Mr. Spencer explained that the previous federal appropriation
authority was to receive and expend approximately $16 million,
however only approximately $2 million has been received and
therefore no expenditure authority is now requested. Therefore, he
stated that the Department has received authority to receive and
expend more money than received and additional authority is
unnecessary at this time. He told of efforts with U.S. Senator Ted
Stevens to secure the remaining funds.
Co-Chair Wilken asked if the 10 percent match requirement would
remain the same.
Ms. Stinson responded that the match requirement percentage is
unknown because the State has yet to decide which grants it would
apply for. She noted the $2 million of grant funds received in FY
03 did not require matching funds from the State, although that
funding source could not be utilized for program management
services, including professional services and Federal Communication
Commission (FCC) licensing.
Co-Chair Wilken surmised that no commitment has been made to fund
the program at a 90 to 10 matching fund ratio, and that the
requirement for matching funds and the amount of the percentage
could change.
Ms. Stinson affirmed.
Co-Chair Wilken asked what agency would be expected to maintain the
system once in operation.
Ms. Stinson understood the State and Federal governments would
maintain the system with assistance from local governments. She did
not expect operation fees would be higher than the current expense.
She spoke of the current system of collecting user fees.
Co-Chair Wilken asked if other State agencies were requesting funds
for this project.
Ms. Stinson informed that the Department of Transportation and
Public Facilities is requesting matching funds to receive federal
grant monies, and noted the Department has received $3.3 million
federal funds for subscriber units and could request matching funds
from the legislature. She indicated she is researching whether the
matching funds utilized by the Department of Administration could
also be applied as matching funds for the Department of
Transportation and Public Facilities project as well. She furthered
that the Department of Public Safety has requested federal receipt
authority. She expected these were the total requests the
legislature would receive for the ALMR project.
Co-Chair Wilken clarified that only the Department of
Administration, the Department of Transportation and Public
Facilities and the Department of Public Safety would submit funding
requests.
Ms. Stinson affirmed, qualifying that other two-way communication
requests could be received, but would be "stand alone" systems not
related to the ALMR system.
Senator Bunde requested the cost estimates of the four largest
Alaskan communities to take full advantage of the ALMR system. He
spoke of the benefits of full communication. He warned that in
event of disaster, the State would be blamed for not providing
adequate funds.
Co-Chair Wilken clarified the request is for a range of costs for
Anchorage, Fairbanks, Juneau and the Mat-Su Valley, rather than
specific amounts.
Ms. Stinson stated she would research the estimated costs to these
communities. She noted that through the system design process, some
data is already available.
Mr. Spencer noted that one or two municipalities and nonprofit
organizations have received "substantial" federal funds for
subscriber units.
Ms. Stinson furthered that the Department has received $1.7 million
Informational Services Fund (ISF) for Fairbanks, through the
federal Office of Domestic Preparedness. She stated that once the
system is operational in Valdez, efforts would focus on the
Fairbanks area with intent the "system would go live this summer".
She stated that a review process would commence to determine how
the grant funds would be distributed.
Senator B. Stevens noted the estimated cost for completion of the
north zone phase of the ALMR project. He understood that $6.8
million federal funds would be available for 90 percent of the cost
to purchase the subscriber units. Therefore he surmised the federal
government would pay the subscriber unit costs.
Co-Chair Wilken restated the question.
SFC 03 # 28, Side B 10:54 AM
Co-Chair Wilken continued.
Senator B. Stevens attempted to understand who would purchase the
subscriber units given the significant amount of federal funds
available.
Ms. Stinson understood the estimated cost of subscriber units in
the Fairbanks area would be significantly higher than $6.8 million.
She informed that $6.8 million federal funds are designated for
State agencies' subscriber units and infrastructure and that $1.7
million of federal funds is designated for locally owned subscriber
units. She stated that the Department is evaluating the "federal
funding issues" to request additional subscriber units for State
agencies.
Co-Chair Wilken asked for information on what the requested $8.5
million would purchase.
Co-Chair Green questioned the ISF funds.
Mr. Spencer explained these funds are utilized for operations of
the Informational Technology Group. He stated this funding source
was initially used for the matching requirements when this project
began.
Co-Chair Wilken furthered these funds are collected from State
agencies "across the board" to pay telecommunications and computer
services expenses.
Co-Chair Wilken stressed the ALMR project entails a major
expenditure and he wanted to ensure that appropriate considerations
are given.
Priority Maintenance for Facilities not in the Public Building
Fund
$300,000 general funds
Reference No.: 37947
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2005
On-going Project
Funding for maintenance projects in Department of
Administration managed facilities that are not part of the
Public Building Fund.
Mr. Spencer explained that the request for FY 04 only includes the
Dimond Courthouse Roof Repair project. He noted that although many
projects are necessary, this project is included because water is
leaking into the walls of the building.
Co-Chair Wilken noted an earlier request for carpeting in the
courthouse and asked why the two projects are not combined.
Mr. Spencer informed that the Department of Administration is
responsible for maintenance and the Alaska Court System addresses
other matters such as re-carpeting.
Public Building Fund Projects
$2,500,000 public building fund
Reference No.: 37943
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2005
Funding is requested for renewal projects in PBF facilities.
Mr. Spencer reminded that this project addresses ongoing
maintenance needs utilizing funding generated from rent collected
from occupant agencies.
Co-Chair Wilken noted the public building fund is in its third year
of operation and asked the balance of the fund.
Mr. Spencer did not know. He noted the requested funding of this
item would utilize future revenues because the projects are
deferred maintenance.
Co-Chair Wilken detailed the proposed projects. He clarified that
the entire $2.5 million would not be expended in FY 04.
Mr. Spencer affirmed and detailed. He exampled waterline
replacements, warning that if the system failed the repair costs
could be triple the amount of the initial replacement cost.
Co-Chair Wilken questioned if these projects should be accounted as
encumbrances rather than expenditures.
Mr. Spencer answered it could, but pointed out the projects listed
in the backup material are the planned expenditures; however if
breakage occurs elsewhere, the funds would be diverted for those
repairs.
Co-Chair Wilken requested the total fund balance.
Senator B. Stevens asked if the building fund consists of the
contributions of all tenants.
Mr. Spencer listed the eight facilities included in the public
building fund. He noted this is a pilot project and that the intent
of the fund is to "capture" non-general funds for deferred
maintenance expenses.
Mr. Spencer furthered that in prior years the Department of
Administration undertook minimal maintenance projects because the
facilities were the responsibility of the Department of
Transportation and Public Facilities.
Senator B. Stevens commented that 76 percent of this allocation
would be for one facility and asked if 76 percent of the revenue
generated is from that facility. He questioned whether the public
building fund is equitable.
Mr. Spencer responded that in the short term the fund would not be
equitable, although it would be in the long term. He explained that
the income generated in a given year might not match the
expenditures of one facility; however the expenditures in another
year would be higher at a different facility. He qualifies the
expenditures would vary for different projects.
Senator Bunde asked if the public building fund has adequate funds
to undertake the substantial repairs necessary to the Atwood
building caused by damage of the recent windstorm.
Mr. Spencer gave examples of other projects could be delayed to
enable funding to be expended on repairs to the Atwood building.
Co-Chair Wilken listed the balance of the public building fund at
the end of FY 02 at $45 million, of which $4.3 was cash.
Mr. Spencer affirmed but qualified the cash balance fluctuates.
Information Technology Group Equipment Replacement
$2,465,000 Information Services funds
Reference No.: 37948
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2006
On-going Project
Funding will be used to purchase/lease the top priority
equipment and services that will meet current and expected
customer demand, within the amount collected through rates for
depreciation.
Mr. Spencer explained that the ISF funds are collected as earlier
described by Co-Chair Wilken, and utilized to replace outdated
equipment.
Senator Bunde commented to on-going maintenance versus the ALMR
project. He compared the expense of maintaining and repairing
existing equipment to purchasing new equipment, pointing out that
either option has expense.
AT EASE 11:13 AM / 11:14 AM
Department of Community and Economic Development
Rural Internet Access
$7,500,000 federal receipts
Reference No.: 37909
Category: Development
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
One-time Project
Grants to local governments and non-profit organizations to
expand internet service throughout rural Alaska.
TOM LAWSON, Director, Division of Administrative Services,
Department of Community and Economic Development gave the funding
history of this item beginning with $7.5 million appropriated in
the FY 03 supplemental budget appropriation legislation.
Co-Chair Wilken asked the locations where this program would be
implemented.
Mr. Lawson explained the competitive grant process and noted the
recipients have not yet been determined.
Co-Chair Wilken asked if the grants would be utilized to access
satellite signals or cable optic signals.
MIKE MORA, Common Carrier Specialist, and Project Manager,
Regulatory Commission of Alaska testified via teleconference from
Anchorage that the grant program was initially intended to be
"technologically neutral". However, he pointed out that the
majority of the rural areas eligible for this funding would receive
service via satellite transmission.
Senator Bunde noted the intent that through Internet providers, the
program would become self-sufficient. He asked if the subscribers
or providers would eventually pay the service expenses.
Mr. Mora explained that once the grant program expires, residents
of the participating communities would be responsible for the fees.
He surmised the fees should be comparable to that of larger
communities.
Senator Bunde estimated the amount at $20 to $50 per month.
Mr. Mora affirmed.
Senator Bunde surmised this is a substantial fiscal expectation for
rural economies that could not support local government. He asked
the consequences to the State if communities do not continue to
subscribe to the service.
Mr. Mora assured that the grant would be issued to telecom
carriers, which must submit a business model to demonstrate
evidence that the program would be sustainable through consistent
demand for services.
Co-Chair Wilken assumed that the rfp applications for grants would
be scored according to the potential for the grantee to provide
ongoing funding without State support.
Mr. Mora answered this is correct. He pointed out that although no
matching funds are required to receive the federal funds, the
Department would require partial funding from the carrier.
Co-Chair Wilken asked if the Department would require evidence of
ongoing support.
Mr. Mora replied that a component of the grant qualification is to
demonstrate ongoing sustainability.
Co-Chair Wilken asked if this would be a requirement or a
suggestion.
Mr. Mora answered it would be a requirement and also would be
included in the scoring process.
Community Development Grants
$3,470,000 federal receipts
$150,000 general funds
Reference No.: 33925
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
State Match Required
On-going Project
Multiple federally-funded programs, enabling Department of
Community and Economic Development to provide grants to
communities and non-profit organizations for community
development.
Mr. Lawson listed the main funding source as the Federal Emergency
Management Agency (FEMA) and the U.S. Department of Agriculture,
among others.
Community Block Grants
$6,000,000 federal receipts
Reference No.: 33488
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
On-going Project
Multiple federally-funded programs, enabling Department of
Community and Economic Development to provide grants to
communities and non-profits that provide services and/or
benefit the low- to moderate-income individuals.
Mr. Lawson noted no state match is required.
Language Section: National Petroleum Reserve Alaska Impact
Grant Program; PCE Pgm
$35,300,000 federal receipts
Reference No.: 35360
Category: Development
Location: Barrow
Election District: Arctic
Estimated Project Dates: 07/01/2003 - 06/30/2008
Grants to communities for public facilities and services.
Priority is given to those communities directly or severely
impacted by the leases and development of oil and gas within
the National Petroleum Reserve.
Mr. Lawson explained this item relates to authorization to receive
funds from the National Petroleum Reserve - Alaska (NPR-A) lease
sales and annual least payments for the purpose of providing grants
to communities impacted by the development of oil and gas within
the NPR-A.
Mr. Lawson gave an updated amount available as $33.6 million. He
noted the funds would be allocated for 20 projects at a total cost
of $25 million with the balance of the funds deposited into the
permanent fund, the public school trust fund and the Power Cost
Equalization (PCE) fund as outlined in statue.
Co-Chair Wilken noted the funding source is listed as federal
receipts but he pointed out the funds actually are the State's
share of projected rent, lease payments and royalties on production
for FY 04.
Mr. Lawson affirmed and detailed the lease sales of 1999 and 2002,
from which the revenue is generated.
Co-Chair Wilken calculated the total revenue from NPR-A development
would be approximately $70.6 million.
Mr. Lawson answered yes.
Co-Chair Wilken detailed that the total revenue is equally divided
between the State and federal government, and of the State's
portion, approximately $25 million would be allocated to the
community impact grants, and 25 percent, or approximately $2.5
million, of the remaining $10.2 million would be deposited into the
permanent fund, one-half percent would be allocated to the public
schools trust fund, leaving approximately $7.3 million for PCE. He
furthered that any remaining funds not utilized by PCE would be
deposited to the general fund.
Mr. Lawson affirmed, but qualified differing legal opinions have
been issued about the distribution of funds in excess of the
community impact grants.
Co-Chair Wilken cited Article IX, Section 15 of the Alaska
Constitution, "At least 25 percent of all mineral lease rental,
royalties, royalty sale proceeds … received by the State shall be
placed in a permanent fund…" He therefore opined the current
practice of allocation of NPR-A funds is in direct conflict with
the constitution.
Co-Chair Wilken continued that if the applications for community
impact grants were greater than the available funds, no funds would
be deposited from this source into the permanent fund.
Mr. Lawson affirmed.
Co-Chair Wilken furthered that funds from this source could not be
contributed to the State general fund or the school trust fund.
Mr. Lawson again affirmed.
Co-Chair Wilken surmised that the benefits of the National
Petroleum Reserve - Alaska (NPR-A) would only benefit those living
north of the Brooks Range.
Co-Chair Wilken was unsure that Alaskans understand that the NPR-A
does not actually benefit the school trust fund or other State
services. He stressed that current law allows four communities to
claim all the benefits at the expense of distributing these funds
to benefit the remaining residents of Alaska.
Co-Chair Wilken calculated that the grant requests for FY 04 total
$53.2 million of which $35 million has been approved.
Mr. Lawson did not have the exact amount, although knew the amount
exceeded $35 million.
Co-Chair Wilken compared the situation of the grant funds
appropriated to four communities to a hypothetical per capita
appropriation of $420 million capital grants to the Fairbanks North
Star Borough or $1.2 billion for Anchorage.
Co-Chair Wilken asked for a description of how the grant
applications are scored. He understood the criteria based on the
impact of oil development and asked whether additional State or
federal criterion is involved. He asked whether the extent of oil
development impact is measured, whether directly or indirectly and
how a sewage treatment facility relates to oil fields located
hundreds of miles away.
Co-Chair Wilken noted other funding requests included in the FY 04
capital budget to construct oil field connector roads and asked why
they were not proposed to be undertaken with NPR-A funds, given the
direct impact on local communities.
Co-Chair Wilken summarized his arguments stated above.
Senator Olson pointed out that the oil fields are not hundreds of
miles away from Barrow and asserted that sewage treatment is
necessary because of the influx of people brought as a result of
the oil production activities.
Senator Olson noted that only projects within the North Slope
Borough are included and questioned whether needs from other
communities could be addressed with these funds.
GENE KANE, Director, Department of Community and Economic
Development, testified via teleconference from Anchorage, that
other requests were denied for various reasons. He listed
incomplete applications, lack of detail, unclear impact of the NPR-
A, and duplication for projects already funded.
JO GROVE, Grants Manager, Division of Community and Business
Development, Department of Community and Economic Development,
testified via teleconference from Fairbanks added that most of the
applications were from communities within the North Slope Borough,
and would benefit Anaktuvuk Pass, Barrow, Nuiqsut and all
communities within the Borough. She exampled the village school
counselor program and the waterfowl continuation study.
Senator Olson asserted that denial of applications because they
were incomplete or lacked detail appeared to be more lack of
sophistication rather than actual need. He predicted that the North
Slope Borough has excellent grant writers.
Co-Chair Wilken detailed a list of the proposed projects [copy not
provided], their scores and the delineation of the approved
projects based on the amount of funding available.
Senator Olson commented that many of the proposed projects had
greater merit, citing a proposed senior center. He referenced a
proposal to eliminate or reduce the Alaska Longevity Bonus benefit
payments to senior residents. He requested that the reviewing
committee impose a "broader perspective" as to what programs would
offer the greatest benefit and fulfill greatest needs.
Senator B. Stevens asked about a proposed project titled "Grant
Oversight and Supervision" and asked how this application received
a 100 percent score.
Ms. Grove stated she would provide the information.
Senator B. Stevens also requested the "approved indirect rate" as
approved by the U.S. Department of Labor. He asserted that
management of grants should be included in the grants themselves.
Co-Chair Wilken clarified the request for the scoring criterion of
applications, whether the criterion is established by State or
federal guidelines, and the relationship of the approved grants to
the NPR-A laws.
SFC 03 # 27, Side A 11:44 AM
[Note: Audio recording of this meeting begins with tape SFC-03 #28
and continues with tape SFC-03 #27]
Senator B. Stevens asked if the Department serves as the oversight
agency for all these grants.
Mr. Lawson affirmed.
Rural Utility Preventative Maintenance
$300,000 general funds
Reference No.: 32588
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
On-going Project
Preventative maintenance to electric power systems in rural
Alaska intended to prevent the need for more costly future
emergency responses to rural Alaskan electric power system
failures.
Mr. Lawson outlined this request.
Co-Chair Wilken asked if this would be the first year this project
was funded.
Mr. Lawson answered that this request has been submitted in past
years and was funded some years and not funded in other years.
Co-Chair Wilken asked if this program operates in conjunction with
the Denali Commission sustainability initiative.
Mr. Lawson responded that the programs are interrelated utilizing
various funding sources.
Senator Bunde questioned if PCE was fully funded whether that
program would pay the maintenance and circuit rider expenses.
Mr. Lawson was unsure.
MIKE HARPER, Deputy Director - Rural Energy, Alaska Industry
Development and Export Authority (AIDEA), testified via
teleconference from an off-net location that properly maintaining
equipment would allow greater production for each gallon of diesel
used. He furthered this would benefit the PCE program. He warned
that not cleaning up and repairing systems would result in
inefficient operations and generator failures. He noted that
failures would require emergency repairs, thus increasing operating
expenses for the PCE program.
Senator Bunde asked whether completion of this project would result
in reduced electrical rates.
Mr. Harper replied the rates would decrease eventually. He noted
that the rates in smaller communities are three to four times the
rates experienced in Anchorage and Fairbanks. He furthered that
this project would improve power generators and other equipment.
Language Section: Electrical Emergencies
$ 330,000 Rural Electric funds
Reference No.: 32590
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
On-going Project
To provide technical support when an electric utility has lost
the ability to generate or transmit power to its customers and
the condition is a threat to life, health, and/or property in
the rural community.
Mr. Lawson spoke of the rural electrification revolving loan fund
and the implementation of those funds in situations where a system
has "basically failed." He characterized this program as "another
tool to help rural communities."
Senator Bunde clarified that the previous request was for funding
to prevent failures and this separate request is for funding in the
event of a failure.
Mr. Lawson affirmed.
Senator Bunde asked if the reason for the two programs is to keep
costs minimal.
Mr. Lawson replied this has been the practice for several years.
Co-Chair Wilken requested a listing of past expenditures.
Mr. Lawson indicated he would provide the information.
Co-Chair Wilken asked if the funds appropriated for this program
would lapse at end of the fiscal year.
Mr. Lawson affirmed.
Diesel Efficiency and Alternative Energy Program
$250,000 general funds
Reference No.: 32591
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
On-going Project
This program's objective is to lower the cost of power and
heat to predominately rural communities while maintaining
system safety and reliability. This is done by funding
projects such as fuel efficiency improvements, wind resource
development, biomass development, and geothermal energy
resource development. A portion of this appropriation will be
used to provide the required state match to federal grants
also used to fund this program.
Mr. Lawson explained this request is for matching funds to receive
federal funding through the US Department of Agriculture (USDA) and
the US Department of Energy (USDOE). He noted the following budget
item reflects the requested federal funding grants, pointing out
that sometimes the State does not receive the grants.
Co-Chair Green asked whether this request could be interpreted as
providing matching funds for any Denali Commission project
requests.
Mr. Lawson understood some could be utilized in this manner,
although he was uncertain.
Mr. Harper furthered that a small portion of the requested funds
are intended as matching funds for the Denali Commission, but that
the majority are intended as matching funds for the federal grants.
Co-Chair Wilken noted the State has authorized more than $66
million over the past three years and asked how that funding was
expended.
Mr. Lawson clarified the amount Co-Chair Wilken cited represents
programs in addition to the alternate energy projects, and has been
utilized to fund a rural power system upgrade, bulk fuel storage,
and other projects. He offered to provide a listing of all
projects.
Co-Chair Wilken requested detail of how the funds have been
utilized.
Federal Energy Projects
$35,000,000 Federal Receipts
Reference No.: 36338
Category: Health/Human Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2003 - 06/30/2008
On-going Project
AEA [Alaska Energy Authority] anticipates receiving over $35
million in federal funding from various federal agencies in FY
2004. These awards cover several programs including bulk fuel
upgrades, rural power system upgrades and alternative energy
projects.
Mr. Lawson reiterated this item is authorization to receive and
expend grant funds from federal agencies, including the Denali
Commission, the USDA and the USDOE.
Kodiak Launch Site Infrastructure
$64,000,000 federal receipts
Reference No.: 37910
Category: Development
Location: Kodiak
Election District: Kodiak
Estimated Project Dates: 07/01/2003 - 06/30/2008
One-Time Project
Kodiak launch site infrastructure to support the U.S.
Department of Defense's Missile Defense Program.
Mr. Lawson outlined this item.
Co-Chair Wilken asked whether these activities have been funded in
prior years.
Mr. Lawson answered that various improvements have been funded in
the past. He explained the backup documentation does not reflect
previous funding because the proposed improvements relate to
missile defense, while other projects related to infrastructure
specific to other activities.
Southeast Conference - Southeast Intertie Planning and
Organization
$160,000 general funds
Reference No.: 37215
Category: General Government
Location: Juneau Areawide
Election District: Juneau Areawide
Estimated Project Dates: 07/01/2003 - 06/30/2008
One-Time Project
Grant to provide funding for the Southeast Conference
Organization
Mr. Lawson explained this request would provide grant funding to
the nonprofit Southeast Conference for the design and permitting
costs of an intertie.
Senator Bunde asked whether this project has local support or if it
would be "derailed" due to environmental concerns.
Mr. Lawson understood the Southeast Conference is "very much
interested" in securing these funds. He stated he would request
further information regarding public support.
Senator Bunde pointed out that the Southeast Conference does not
"speak" for all residents of Southeastern Alaska.
Co-Chair Wilken asked why funding for this appropriation would not
be generated from utility rates assessed to the beneficiaries of an
intertie.
Mr. Lawson was unsure and stated he would research the matter.
Senator Bunde furthered that the universal service charge assessed
to all utility customers is intended for projects such as the
proposed intertie.
Co-Chair Wilken noted alternative funding for this item would be
researched.
Senator Olson referenced the backup material indicates that
previous funding for this item was utilized to hire consultants. He
asked the percentage of the requested $160,000 would be utilized
for consultant fees.
Mr. Lawson replied he would research the matter.
Co-Chair Wilken surmised a good portion would be utilized for
consultant expenses.
Inter-Island Ferry Authority
$250,000 general funds
Reference No.: 37192
Category: Transportation
Location: Prince of Wales Island
Election District: Cordova/Southeast Island
Estimated Project Dates: 07/01/2000 - 06/30/2008
One-Time Project
Grant for operation of the Inter-Island Ferry Authority (IFA)
Mr. Lawson stated this funding would assist the IFA in its
operations. He relayed that another vessel would be on line the
upcoming summer, which would improve cash flow and eliminate the
need for future State general funding.
Co-Chair Wilken asked if the requested funds would be working
capital.
Mr. Lawson affirmed.
Senator Bunde asked if the ferries would be self-sufficient.
Mr. Lawson replied, "That's my understanding, but certainly I'm not
an expert on this project."
Senator Olson asked if the IFA has been operating "in the black" to
date. He requested the "track record" of the Authority's cash flow.
Mr. Lawson did not have a record, but stated he would research and
provide further information. He stated that the IFA was formed in
1997 with vessels funded from federal grants.
Senator Olson asked if the Authority owns the vessels or contracts
for their use.
Mr. Lawson understood the Authority owns the vessels.
Co-Chair Green asked the distinction between this request and the
Department of Transportation and Public Facilities' planning
procedure for a ferry system.
Co-Chair Wilken asked why this request is included in the proposed
capital budget.
Mr. Lawson did not know.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 12:02 PM
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