Legislature(2003 - 2004)
02/02/2004 10:03 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 02, 2004
10:03 AM
TAPES
SFC-04 # 4, Side A
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately 10:03 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Lyman Hoffman
Senator Donny Olson
Senator Ben Stevens
Also Attending: CHERYL FRASCA, Director, Office of Management and
Budget, Office of the Governor; JOAN BROWN, Chief Budget Analyst,
Office of Management and Budget, Office of the Governor.
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
SB 283-APPROP: REVERSE 2003 CBR SWEEP
The Committee heard from the Office of Management and Budget. The
bill was held in Committee.
SENATE BILL NO. 283
"An Act making an appropriation to reverse the deposit of
money available for appropriation in the general fund at the
end of fiscal year 2003 into the constitutional budget reserve
fund; making an appropriation under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the constitutional
budget reserve fund; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Green noted the purpose of this meeting is to gather
information on the accounts that normally carryover from one fiscal
year to the next, but were not allocated from the Constitutional
Budget Reserve (CBR) Fund by the legislature during the previous
session.
CHERYL FRASCA, Director, Office of Management and Budget overviewed
the sub-accounts that were "swept". She reminded that at the end of
the previous legislative session, a number of these sub-accounts
within the general fund were swept into the CBR fund, and that
historically the major appropriation legislation contains a
provision to reverse this sweep to restore the funds to their
respective sub-accounts. She explained such a provision was not
included in the FY 04 appropriation legislation. She noted that the
FY 04 budget legislation contained several appropriations that
relied on the availability of these revenues for expenditure during
the fiscal year.
Ms. Frasca informed that during the previous summer she contacted
the co-chairs of the House of Representatives and Senate Finance
Committees to garner whether the intent was to implement the
affected programs for the period of time before the legislature
reconvened in January, as stipulated in the FY 04 budget
appropriation, and was verbally instructed to continue the delivery
of services.
Ms. Frasca detailed a handout titled "CBR Sweep Summary - DRAFT"
[copy on file] listing the aforementioned accounts. She noted the
following four items did not require a reversal.
FHWA Airspace leases
Amount Swept: $19,049
Minimum Reverse Amount: $0
Fall 2003 Potential Sweep Balance: $19,049
Ms. Frasca informed that these one-time revenues were initially
received several years prior and that the funding source was not
recurrent.
State Forestation Fund
Amount Swept: $194
Fall 2003 Potential Sweep Balance: $194
Ms. Frasca noted that in addition to the small dollar amount, this
fund has not been accessed for several years.
AMHS [Alaska Marine Highway System] Replacement Fund
Amount Swept: $0
Fall 2003 Potential Sweep Balance: $0
Education Facility Maintenance/Construction Fund
Amount Swept: $0
Fall 2003 Potential Sweep Balance: $0
Ms. Frasca stated that because the balance of the two accounts is
zero, there is no need to reverse the funding.
Ms. Frasca continued outlining those items in which a reversal was
necessary to support FY 04 appropriation level and future year
spending as follows.
Voc Rehab Small Business Enterprise Revolving Loan Fund
FY 04 Appropriation: $365,000
FY 04 Revenue: $230,000
FY 04 Revenue Shortfall: $135,000
Amount Swept: $121,587
Minimum Reverse Amount: $121,587
Fall 2003 Potential Sweep Balance: $0
Reversal of full amount will make the funding available to pay
FY 05 costs and ease fund cash flow.
If Revenue not equal to Appropriation: $13,413 Shortage does
not appear to be a problem; actual expenditures are lower than
authorization.
Ms. Frasca told of proceeds from vending machine facilities to be
utilized to aid blind and severely handicapped licensees who
operate the vending machines. She stated the balance of this sub-
account is accumulated to allow for larger projects, such as
remodeling of facilities. She said the specific funds are intended
for construction at the Atwood Building.
Alaska Historical Commission
FY 04 Appropriation: $0
FY 04 Revenue: $0
FY 04 Revenue Shortfall: $0
Amount Swept: 85,302
Minimum Reverse Amount: $0
Fall 2003 Potential Sweep Balance: $85,302
Department requests full amount be reversed to support future
year spending.
If Revenue not equal to Appropriation:
Ms. Frasca noted this funding is generally utilized for special
projects and the funds are accumulated over time.
Senator Dyson asked the proposed projects.
Ms. Frasca exampled a commemoration of the 50 year anniversary of
Alaska statehood.
Oil/Haz Substance Release Accounts
FY 04 Appropriation: $20,171,600
FY 04 Revenue: $9,232,900
FY 04 Revenue Shortfall: $10,938,700
Amount Swept: $18,349,829
Minimum Reverse Amount: $10,938,700
Fall 2003 Potential Sweep Balance: $7,411,129
Department requests full amount be reversed to support future
year spending; annual revenue not sufficient to maintain
current spending level.
If Revenue not equal to Appropriation: Extra sweep supports
future appropriations.
Ms. Frasca explained these funds are utilized to support capital
projects and cover operating expenses in the Department of
Environmental Conservation and the Department of Transportation and
Public Facilities.
Ms. Frasca also noted this reversal request includes reversal of
prior year balances.
Co-Chair Green clarified this request is not unusual.
Ms. Frasca affirmed a number of these items carry forward from one
year to the next.
Employment Assistance & Training (STEP)
FY 04 Appropriation: $5,639,700
FY 04 Revenue: $4,650,000
FY 04 Revenue Shortfall: $989,700
Amount Swept: $1,947,655
Minimum Reverse Amount: $0
Fall 2003 Potential Sweep Balance: $4,547,743
Since fund is a diversion of workers compensation tax monies
assessed against insured and self-insured employers, reverse
full amount.
Ms. Frasca remarked that funds in this sub-account are used to fund
various training programs.
Workers Safety/Comp Account
FY 04 Appropriation: $4,139,400
FY 04 Revenue: $4,139,400
FY 04 Revenue Shortfall: $0
Amount Swept: $4,547,743
Minimum Reverse Amount: $0
Fall 2003 Potential Sweep Balance: $4,547,743
Since fund is a diversion of workers compensation tax monies
assessed against insured and self-insured employers, reverse
full amount.
Ms. Frasca noted this is a diversion of workers compensation
contributions that are used to fund the Division of Workers
Compensation, and Occupational Safety and Health programs. She
assured that failure to provide reversal of these funds in FY 04
would cause no pending crisis.
Commercial Passenger Vessel Env. Compliance Fund
FY 04 Appropriation: $706,900
FY 04 Revenue: $706,900
FY 04 Revenue Shortfall: $0
Amount Swept: $1,099,965
Minimum Reverse Amount: $706,900
Fall 2003 Potential Sweep Balance: $393,065
Reversal of full amount will make the funding available to pay
FY 05 costs and ease fund cash flow.
If Revenue not equal to Appropriation: -$706,900 Revenue
received late in year and funds FY 05
Ms. Frasca explained these funds are collected from cruise ships to
address emissions and discharges. She stated that this program does
not have a revenue shortfall in the current fiscal year.
JOAN BROWN, Chief Budget Analyst, Office of Management and Budget,
Office of the Governor, interjected that a portion of these
revenues are received at the end of the fiscal year and therefore
the sweep has caused cash flow issues.
Ms. Frasca furthered that funds collected in May and June 2002 were
swept into the CBR and thus unavailable for expenditure.
Tobacco Ed/Cessation Fund
FY 04 Appropriation: $5,395,600
FY 04 Revenue: $4,295,600
FY 04 Revenue Shortfall: $1,100,000
Amount Swept: $1,260,524
Minimum Reverse Amount: $1,100,000
Fall 2003 Potential Sweep Balance: $160,524
Reversal of full amount will make the funding available to pay
FY 05 costs and ease fund cash flow.
If Revenue not equal to Appropriation: Extra sweep supports
future appropriations.
Ms. Frasca reminded these funds represent 20 percent of the Tobacco
Settlement funds annually received by the State and utilized to
fund grants for tobacco cessation programs both within the
Department of Health and Social Services and outside organizations.
Bldg Safety Account
FY 04 Appropriation: $1,603,700
FY 04 Revenue: $1,508,000
FY 04 Revenue Shortfall: $95,700
Amount Swept: $95,700
Minimum Reverse Amount: $92,843
Fall 2003 Potential Sweep Balance: $0
If Revenue not equal to Appropriation: $2,857 Small shortfall
is not a problem.
Ms. Frasca stated this sub-account is utilized to fund the
Department of Labor and Workforce Development mechanical inspection
activities. She remarked that this program has a "shortfall" of
approximately $96,000 as a result of the sweep.
Alcohol/Drug Abuse Trtmnt/Prevention Fund
FY 04 Appropriation: $21,400,000
FY 04 Revenue: $15,300,000
FY 04 Revenue Shortfall: $6,100,000
Amount Swept: $6,191,229
Minimum Reverse Amount: $6,100,000
Fall 2003 Potential Sweep Balance: $91,229
Reversal of full amount will make the funding available to pay
FY 05 costs and ease fund cash flow.
If Revenue not equal to Appropriation: Extra sweep supports
future appropriations.
Ms. Frasca explained this sub-account represents 50 percent of the
proceeds of the alcoholic beverage tax and is utilized to fund
grants for nonprofit organizations as well as some capital
projects.
Co-Chair Green asked if these grants are awarded to "an agency".
Ms. Frasca replied that the alcohol tax revenues are utilized for
several purposes, including construction of the Nome Youth
Detention Facility, Medicaid expenses, suicide prevention programs,
the Department of Corrections, and the Alaska Council on Domestic
Violence and Sexual Assault.
Land Disposal Income Fund
FY 04 Appropriation: $7,818,500
FY 04 Revenue: $4,318,500
FY 04 Revenue Shortfall: $3,500,000
Amount Swept: $5,048,544
Minimum Reverse Amount: $3,500,000
Fall 2003 Potential Sweep Balance: $1,548,554
Department requests full amount be reversed to support FY 04
and FY 05 costs, including FY 05 debt.
If Revenue not equal to Appropriation: Extra sweep supports
future appropriations.
Ms. Frasca requested the full amount be reversed to make the
balance available in FY 05.
AMHS Fund
FY 04 Appropriation: $86,945,400
FY 04 Revenue: $82,945,400
FY 04 Revenue Shortfall: $4,000,000
Amount Swept: $9,277,305
Minimum Reverse Amount: $4,000,000
Fall 2003 Potential Sweep Balance: $5,277,305
If Revenue not equal to Appropriation: The extra sweep amount
is to load the fund for FY 05. FY 05 will be shortfunded
without full reversal.
Ms. Frasca stated $4 million is necessary to fund operations for
the remainder of FY 04 with the balance available to support the
system in FY 05.
The Office of Management and Budget recommends the following two
items be reversed "to Restore Balance - So Available in FY 05".
Debt Retirement Fund
FY 04 Appropriation: $53,820,600
FY 04 Revenue: $61,747,107
FY 04 Revenue Shortfall: $0
Amount Swept: $7,926,507
Minimum Reverse Amount: $7,926,507
Fall 2003 Potential Sweep Balance: $0
Reversal will make the funding available to pay FY 05 debt
costs.
If Revenue not equal to Appropriation: -$7,926,507 the extra
sweep amount is to load the fund for FY 05. FY 05 will be
shortfunded without full reversal.
Ms. Frasca emphasized the funds are not necessary for FY 04, but
rather would be needed for FY 05.
Ak Tech Voc Ed Pgm Fund (TVEP)
FY 04 Appropriation: $4,561,500
FY 04 Revenue: $4,561,500
FY 04 Revenue Shortfall: $0
Amount Swept: $913,590
Minimum Reverse Amount: $913,590
Fall 2003 Potential Sweep Balance: $0
Since fund is a diversion of monies that would otherwise go
into the unemployment insurance trust fund, reverse full
amount.
If Revenue not equal to Appropriation: -$913,590
Ms. Frasca explained these funds are utilized for University of
Alaska programs, the Kotzebue Technical Center, the Alaska
Vocational Technical Center, and the Galena Project Educational
Vocational Training Center.
The Office of Management and Budget categorized the following item
in the handout as "Reverse to Restore Prior Year Account Balances
over $999 to Communities".
Municipal Capital Matching Grants (sum of 2 grant programs)
Amount Swept: $2,301,844
Minimum Reverse Amount: $2,158,525
Fall 2003 Potential Sweep Balance: $143,319
If Revenue not equal to Appropriation: -$2,158,525 Expenditure
would require a supplemental appropriation. Potential sweep
amount affects accounts less than $1000.
Ms. Frasca noted these funds represent the balance held by a number
of smaller communities in their capital matching grants accounts.
She stated that reversal of this item would restore the funds to
each community.
This Office of Management and Budget noted this final item as a
"Policy Call".
Railbelt Energy Fund
Amount Swept: $29,571,811
Fall 2003 Potential Sweep Balance: $29,571,811
Ms. Frasca stated the FY 04 budget does not contain an
appropriation that is dependant upon these funds; however, the
Office of Management and Budget requests the funds be reversed.
Senator Hoffman asked the purpose of reversing these funds.
Ms. Frasca responded this would restore the account to allow future
legislatures to utilize the funds.
Ms. Frasca relayed that departmental managers were "resting easier"
with the knowledge that the legislature was considering reversal of
these accounts.
Ms. Frasca pointed out that the FY 04 budget did not contain a
necessary $120,000 appropriation to the Department of Revenue to
manage the CBR. She requested these funds be appropriated.
Co-Chair Green ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 10:22 AM
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