Legislature(2003 - 2004)
02/24/2004 09:03 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 24, 2004
9:03 AM
TAPES
SFC-04 # 19, Side A
SFC 04 # 19, Side B
SFC 04 # 20, Side A
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately 9:03
AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Lyman Hoffman
Also Attending: KATHRYN DAUGHHETEE, Director, Division of
Administrative Services, Department of Law; BOB BARTHOLOMEW,
Chief Operating Officer, Alaska Permanent Fund Corporation,
Department of Revenue; SUSAN TAYLOR, Director, Division of
Administrative Services, Department of Revenue; JANET CLARKE,
Director, Division of Administrative Services, Department of
Health and Social Services; JOHN MACKINNON, Deputy
Commissioner of Highways and Public Facilities, Department of
Transportation and Public Facilities; NANCY SLAGLE, Director,
Division of Administrative Services, Department of
Transportation and Public Facilities; TOM LAWSON, Director,
Division of Administrative Services, Department of Community
and Economic Development; JERRY BURNETT, Director, Division of
Administrative Services, Department of Corrections; KAREN
REHFELD, Deputy Commissioner, Department of Education and
Early Development; EDDIE JEANS, Manager, School Finance and
Facilities Section, Education Support Services, Department of
Education and Early Development; JOHN CRAMER, Director,
Division of Administrative Services, Department of Military
and Veterans' Affairs;
Attending via Teleconference: From Anchorage: CRAIG TILERY,
Chief Assistant Attorney General, Statewide Section
Supervisor, Environmental Section, Civil Division, Department
of Law; MARK JOHNSON, Commissioner and Chair, Regulatory
Commission of Alaska, Department of Revenue
SUMMARY INFORMATION
SB 313-FIRST SUPPLEMENTAL APPROPRIATION
SB 314-SECOND SUPPLEMENTAL APPROPRIATION
The Committee heard presentations on the funding requests from
the Department of Law, the Department of Revenue, the
Department of Health and Social Services, the Department of
Transportation and Public Facilities, the Department of
Community and Economic Development, the Department of
Corrections, the Department of Education and Early
Development, and the Department of Military and Veterans
Affairs. The bill was held in Committee.
SENATE BILL NO. 313
"An Act making supplemental and other appropriations;
amending appropriations; making an appropriation to
capitalize a fund; and providing for an effective date."
SENATE BILL NO. 314
"An Act making supplemental and other appropriations;
amending and repealing appropriations; making
appropriations to capitalize funds; and providing for an
effective date."
This was the second hearing for this bill in the Senate
Finance Committee.
The Committee continued hearing presentations from departments
on the budget requests of both bills. The Committee referenced
a spreadsheet prepared by the Office of Management and Budget
dated February 23, 2004, outlining each request [copy on
file].
Department of Law
SB 313
Section: 2
Budget Request Unit (BRU): Environmental Law
Supplemental Need: Exxon Valdez Oil Spill on-going costs
for experts and outside counsel to analyze continuing
injury and develop restoration options; June 30, 2005
lapse date.
$100,000 EVOS Restoration fund
KATHRYN DAUGHHETEE, Director, Division of Administrative
Services, Department of Law, testified that Assistant Attorney
General Craig Tilery would be best able to outline this
request.
CRAIG TILERY, Chief Assistant Attorney General, Statewide
Section Supervisor, Environmental Section, Civil Division,
Department of Law, testified via teleconference from Anchorage
as follows.
Section 2 of the fast track supplemental appropriation
contains an item for the sum of $100,000 to be
appropriated from earnings on the moneys received as
restitution from Exxon in connection with their criminal
plea agreement in the Exxon Valdez oil spill. The money
is to be used to fund analysis of a continuing injury
from the oil spill and to develop options for restoration
of such injury. Many of the natural resources injured by
the Exxon Valdez oil spill have recovered or are well
along in the process of recovery. One area of particular
concern stems from their discovery in 2001 that there is
significantly more oil remaining in a toxic state in the
environment than was expected. Preliminary studies
indicate that this lingering oil is bio-available to
species that feed in the inter-tidal and near shore
environments. Preliminary studies also indicate that
certain species with access to this oil, in particular
harlequin ducks and sea otters, continue to ingest the
oil and may be adversely affected by it. In addition
there are other species such as herring where injury
persists, but the connection to the oil spill remains
clouded. This appropriation is intended to allow the
State to retain independent outside experts to review
these studies and, if warranted, to develop a strategy to
deal with any problems.
Co-Chair Green asked if this request must be a FY 04
supplemental appropriation.
Mr. Tillery affirmed and explained the funds must be secured
this year to enable field studies to begin at the start of the
summer season.
SB 314
Section: 9
BRU: Civil Division, Deputy Attorney General
Supplemental Need: Judgments and Claims
as of February 5, 2004 $2,825,490.66
$ 2,825,500
Ms. Daughhetee stated that this reflects an annual request by
the Department of Law to compensate for judgments and claims,
which are amounts arising from legal issues that the State is
obligated to pay.
Co-Chair Green asked for an overview of those judgments and
claims in excess of $200,000.
Item #2
Dillion & Fincley
Markey v. State
Settlement-house destroyed following collapse of
roadway
Date: 10/20/2003
Amount: $1,138,844.73
Interest: $29,719.17
Total: $1,168,563.90
Ms. Daughhetee explained that the largest judgment and claim
is the Markey v. State case involving the collapse of a
roadway embankment, which resulted in the "total destruction"
of the Markey home. This case went to trial as an "inverse
condemnation". The jury determined that the State's
rehabilitation projects along Juneau's Fritz Cove Road had
lead to an over-compaction of the embankment. The negotiated
settlement is $175,400 below the overall amount awarded by the
court. This judgment and claim is listed on the spreadsheet
provided by the Department of Law titled, "2004 Judgments &
Claims - General Funds" [copy on file].
Item #10
James P. Jacobsen itf Bennett White
Bennett White v. State, Department of
Transportation and Public Facilities
Maritime personal injury case
Date: 6/19/2003
Amount: $324,000
Interest: $12,549.45
Total: $336,549.45
Ms. Daughhetee informed that Mr. White was an "able-bodied
seaman" employed by the Alaska Marine Highway System. While
directing traffic on the M/V Aurora ferry he seriously injured
his left knee. After a series of operations, a medical doctor
determined that Mr. Bennett could not continue to work aboard
ships. Mr. Bennett subsequently sued the State under the
federal Jones Act claiming that the State was negligent in
failing to paint the traffic lanes, and did not provide safe
working conditions. An economic expert determined that Mr.
Bennett's future earnings based on his age at the time of the
injury would total approximately $600,000. The negotiated
settlement is $360,000. A portion of the settlement has
already been paid; the remaining portion is $324,000.
Ms. Daughhetee noted that the legislature passed a worker's
compensation law effective July 1, 2003, which should hinder
cases like Mr. Bennett's from occurring in the future.
Item #11
Jermain, Dunnagan & Owens
ASEA v. State
Damages awarded in health insurance cost shifting
Date: 11/28/2003
Amount: $1,005,720
Interest: $22,215.39
Total: $1,027,935.39
Ms. Daughhetee explained that the Association attempted to
implement a cost shifting mechanism within its health benefits
trust that would allow employees with double-coverage the
option of moving the cost of premiums for their independents
to Select Benefits health coverage. The State argued that
statutes prohibited the union from this cost shifting;
however, the court determined that the State could not hinder
the union from implementing the mechanism. The court also
found that the State was liable for 20% of costs the ASEA
could have saved if allowed to implement the cost shifting
mechanism. The State is required to award the ASEA $1,005,720
million.
The State eventually authored regulations that reduced State
employee coverage to 30% for anyone participating in cost
shifting. These regulations have prevented much cost shifting.
Senator Hoffman asked the amount of the judgment that pertains
to attorney fees.
Ms. Daughhetee answered that this award is the amount the ASEA
would have saved if allowed to implement the cost shifting
mechanism. She added that she was unsure if attorney fees were
included in the award amount.
Ms. Daughhtee mentioned a judgment and claim resulting from a
personal injury case involving a pedestrian on a State-owned
bicycle path who stepped on some unsecured metal, fell and
broke his leg. The settlement for the negligence claim was
$117,500.
Ms. Daughhetee added that the Department of Law is requesting
an extended lapse date for certain FY 03 legal cases,
including the Planned Parenthood case, because the timing of
the legal events related to those cases would continue beyond
FY 04.
Senator Dyson asked for a summary of the Planned Parenthood
case.
Ms. Daughhetee responded that the Planned Parenthood case
arose out of legislation that requires a minor female to have
the consent of a parent of guardian before seeking an
abortion.
SB 314
Section: 10
BRU: Civil Division and Criminal Division
Supplemental Need: Technical change to sec. 60, ch. 82,
SLA 03 which appropriated $175,000 to Department of Law,
Civil Division for outside counsel costs. The
appropriation should have been to the Criminal Division
$0
Ms. Daughhetee stated this item is a technical correction,
which would ratify an appropriation to the Civil Division of
the Department of Law. The Department has since realized that
the appropriation should be directed to the Criminal Division.
This ratification would enable a transfer of the funds.
Co-Chair Green asked if Section 10 and the extended lapse date
requests relate to the same court cases.
Ms. Daughhetee replied that the technical change in Section 10
relates to one of two cases that would be affected by the
extended lapse date.
Department of Revenue
SB 313
Section: 8(a)
BRU: Alaska Permanent Fund Corp.
Supplemental Need: Increased costs to advocate for POMV
$300,000 Perm Fund Receipts
BOB BARTHOLOMEW, Chief Operating Officer, Alaska Permanent
Fund Corporation, Department of Revenue, testified that when
drafting the FY 04 operating budget the Alaska Permanent Fund
Corporation had not realized that educational advertising
would be needed in FY 04. This advertising would educate the
public about the Alaska Permanent Fund Corporation's Board of
Trustee's Percentage of Market Value (POMV) proposal. During
the last Board of Trustee's meeting the Trustees determined
that the educational advertising must occur as soon as
possible due to lack of public understanding.
SB 313
Section: 8(b)
BRU: Alaska Permanent Fund Corp.
Supplemental Need: Authorization that APFC may advocate
for POMV
$0
Mr. Bartholomew recommended a technical correction in the
language of the bill to clarify that the Board of Trustees
does not interact directly with the legislature, rather that
the operating officer interacts with the legislature on the
Board's behalf.
Mr. Bartholomew expressed that this request is more important
than the preceding request for funding to use for POMV
education purposes. This language would demonstrate that the
legislature supports a POMV method of managing the Alaska
Permanent Fund, and also would authorize the Alaska Permanent
Fund Corporation to campaign in support of adopting a POMV
method for the Fund. Current statutes would subject the
Corporation to Alaska Public Offices Commission (APOC) rules
if a resolution were passed to place a Constitutional
amendment initiative on the ballot. He asserted that the
Corporation would be "severely restrained" in the efforts it
could undertake in lobbying for passage of the ballot measure,
as the Corporation is not currently authorized to influence
actions.
Mr. Bartholomew qualified that APOC rules would allow
representatives of the Corporation to speak on the subject of
POMV if invited, but would not allow representatives to speak
at meetings if not previously requested to participate. He
commented on the "gray area between education and advocacy"
and he asserted both would be necessary.
Senator Hoffman commented that this request raises concerns
and that a decision on the matter would be premature as a
resolution to amend the Constitution has not yet been adopted.
He questioned the need for FY 04 supplemental funding and
instead recommended the funding be addressed in a fiscal note
accompanying the resolution itself.
Mr. Bartholomew responded that the Board deliberated on the
issue during meetings held in December 2003 and January 2004
and established intent to begin education efforts in February
2004. He told of a proposal to contract with a media firm to
assist the Alaska Permanent Fund Corporation with educating
the public. The education efforts would demonstrate how
management of the Fund currently operates and how it would
operate under a POMV method, therefore education would be
useful even if the POMV resolution were not passed. The Board
has considered the potential reactions of the public in
response to the use of public funds to support the education
efforts.
Senator Dyson shared concerns about using public money to
advocate for something that "government wants". He asked for
examples of other instances when the government has used
government funds to "sell a position that government wants
voters to approve."
Mr. Bartholomew did not have examples of other instances. Some
government agencies utilize State funds to promote Alaskan
products, such as the Alaska Seafood Marketing Institute's
promotion of Alaskan seafood, but selling a product is
different from selling a public policy position. Both State
and local governments have used limited amounts of government
funds to educate the public about bond proposals, but the
education methods were not as extensive as those proposed in
this request.
Co-Chair Wilken also shared concerns about the timing of this
request. He had understood that $1.4 million or $1.8 million
would be expended on the campaign to amend the Constitution.
He asked if this $300,000 request represents a supplement to
the larger sum, or a change in plans.
Mr. Bartholomew replied that this FY 04 supplemental budget
request and the request for funds to be appropriated in the FY
05 budget totals $1.4 million. The total projected FY 04
expenditures would be $500,000: $300,000 from this request,
and $200,000 from funds appropriated in the FY 04 operating
budget. The total projected FY 05 expenditures would be
$900,000. These amounts reflect the maximum amount proposed
for the education efforts.
Mr. Bartholomew pointed out that if a resolution to amend the
Constitution were not adopted by the legislature, only those
funds appropriated in the FY 04 operating budget and
supplemental budget would be expended.
Senator Bunde disagreed with Senator Hoffman's comments and
asserted that the funds would be well spent. Many people are
not familiar with the operation of the Permanent Fund and the
public should have an opportunity to learn about it. However,
he agreed that the timing of this request is wrong. These
efforts should have been undertaken months ago, rather than at
a time when a proposed change is placed on the ballot.
Mr. Bartholomew stated that regardless of whether the
legislature appropriates this funding, authority to speak on
the merits of POMV is still necessary. He predicted that POMV
education efforts could be undertaken "relatively
inexpensively", as has occurred in the past; however, without
the necessary authority the Permanent Fund cannot sponsor any
public discussion on the POMV plan.
Co-Chair Green clarified that without this authority
representatives of the Corporation could not include POMV as a
topic of conversation.
Mr. Bartholomew affirmed that in consultation with APOC and
the Office of the Attorney General, it was determined that the
Corporation would be limited in its activities and could not
give advice on the ballot measure.
AT EASE 9:33 AM / 9:34 AM
SB 314
Section: 14(a)
BRU: Municipal Bond Bank
Supplemental Need: Increased management fees due to
increased activity
$150,000 Muni Bond Bank Receipts
SUSAN TAYLOR, Director, Division of Administrative Services,
Department of Revenue, testified that existing authorization
allows four to five debt issuances annually. However, last
year funds were requested to allow for seven issuances. The
base authorization for these issuances has not been adjusted
because they are difficult to predict. The Department is
estimating eight to nine issuances in FY 04. The primary costs
of the bond bank are a percentage of the dollars issued. The
Department is requesting a similar amendment for the FY 05
operating budget to eliminate the need for a supplemental
budget amendment in FY 05.
Co-Chair Green asked if the increase in issuances reflects an
overall increase in activity.
Ms. Taylor responded that interest rates are factors that
affect the number of issuances, and in addition the Department
should have increased its FY 04 base budget.
SB 314
Section: 14(b)
BRU: Alaska Permanent Fund Corporation
Supplemental Need: Language clarifying that the
appropriation made in sec. 67(2), ch. 82, SLA 2003 was
for inflation proofing
$0
Mr. Bartholomew stated this request is for clarification and
affirmation of legislative intent. When the FY 04 capital
budget was passed, it included a provision, which swept
approximately $354 million from the Permanent Fund's earnings
reserve account into the principal of the Permanent Fund.
Senator Therriault later specified that the fund transfer be
intended to be a prepayment of the inflation proofing of the
Fund for FY 04. The Permanent Fund distinguishes inflation
proofing appropriations and special appropriations. This
request would specify the intent of the appropriation.
SB 314
Section: 14(c)
BRU: Alaska Permanent Fund Corp.
Supplemental Need: Balance needed to inflation proof the
fund in FY 04
$177,000,000 Permanent Fund Earnings Reserve
Mr. Bartholomew informed that the appropriation necessary to
inflation proof the Fund for FY 04 was repealed at the time of
the transfer. This request would reinstate the inflation
proofing appropriation when the inflation proofing amount is
determined after June 30, 2004. At that time the $354 million
appropriation by the legislature would be subtracted from the
inflation proofing amount to determine if an additional
appropriation is necessary. The current estimate for an
additional appropriation is $170 million.
Senator Hoffman asked if this amount is more than the
anticipated FY 04 inflation-proofing amount estimated last
year.
Mr. Bartholomew answered this amount is close to the amount
predicted in 2003. He added that the legislature retained a
$100 million balance in the earnings reserve account, and
swept all other remaining funds into the principal of the
Permanent Fund for inflation proofing.
Senator Hoffman understood, but asked why the initial
appropriation was inadequate to inflation proof and this
additional appropriation is needed.
Mr. Bartholomew responded that the estimate has not changed,
but that the amount of funds available in the earnings reserve
account was inadequate to fully inflation proof the fund when
the initial appropriation was made. When the legislature
decided to pre-inflation proof the Permanent Fund, it was
informed that the balance in the earnings reserve account
would only allow for a partial pre-inflation proofing, and
that additional funds would be required. Historically,
inflation proofing does not occur until June 30th of each
year.
Senator Hoffman asked if this appropriation is at the request
of the Permanent Fund's Board of Trustees.
Mr. Bartholomew affirmed, and reported that the Board has
historically requested that the legislature "follow the
existing statutes" and inflation proof the Permanent Fund.
Senator B. Stevens recalled that the amount necessary to
inflation proof the Permanent Fund has always been calculated
on June 30th. Therefore, the amount necessary for FY 04 would
not be determined until the upcoming summer.
Mr. Bartholomew confirmed and pointed out that the Permanent
Fund Corporation supplies inflation proofing amount estimates
to the legislature. These estimates change because the
Corporation receives deposits from oil development royalties
monthly.
Senator B. Stevens noted the proposed FY 05 operating budget
contains an appropriation to inflation proof the Fund for FY
05.
Mr. Bartholomew again affirmed and explained that the
legislature would authorize the appropriation, although the
funds would not be allocated until FY 06 when the necessary
inflation proofing amount is finalized.
Senator B. Stevens suggested the practice could be changed
with the amount necessary for the current fiscal year
appropriated in the budget legislation for the following
fiscal year.
Mr. Bartholomew agreed this was a possibility if two effective
dates were established.
Department of Health and Social Services
SB 313
Section: 5(a)
BRU: Capital
Supplemental Need: Add the capital project for the State
veterans' home conversion in Palmer to speed up the
design work and take advantage of the summer construction
season. A corresponding FY 05 capital amendment will also
be submitted to delete the project from the FY 05 budget
$2,275,000 federal funds
$ 459,200 general funds
$ 765,800 Alaska Student Loan Corporation (ASLC)
dividend
$3,500,000 Total Funds
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services noted this
supplemental request would transfer a capital budget
appropriation into the fast track supplemental. This
appropriation would appropriate $3.5 million total funds to
bring the Palmer Pioneers' Home into compliance with the
federal Veterans' Administration. Governor Murkowski is
requesting this appropriation change because it would allow
the State to have an operational State Veterans' Home five
months earlier than a capital budget appropriation would
allow. A 65-percent match from the federal Veterans'
Administration is included in this appropriation request.
Specifically, this appropriation would be used to upgrade the
heating system, electrical systems, make seismic safety and
energy conservation improvements, meet Americans with
Disabilities Act (ADA) accessibility requirements, and fire
codes, mechanical codes, and other appropriate codes of the
Palmer Pioneers' Home.
Co-Chair Green clarified that the facility would be divided
between veterans' home residents and pioneers' home residents.
She mentioned the benefits this facility-sharing system would
provide the Palmer Pioneers' Home, and suggested that this
system would be appropriate for other pioneers' homes as well.
Co-Chair Wilken noted the ASLC dividend fund source and asked
if the dividends would be derived from bond proceeds or from
traditional dividends earned from ASLC activities.
Ms. Clarke replied that the Department had originally
requested general funds for the required match but the Office
of Management and Budget made the determination to utilize
ASLC dividend funds.
SB 313
Section: 5(b)
BRU: Alaska Senior Assistance Program
Supplemental Need: Reduce excess federal fiscal relief
funds
($3,334,000) Federal Unrestricted Receipts
SB 313
Section: 5(c)
BRU: Senior Care
Supplemental Need: Use excess federal fiscal relief funds
for FY 04 costs for Senior Care program
$3,334,000 Federal Unrestricted Receipts
Ms. Clarke explained this allocation would allow the
Department to utilize federal funds appropriated to the Alaska
Senior Assistance Program for the Senior Care program. Section
5(b) reduces the federal funds, and section 5(c) appropriates
those funds to the Senior Care program.
SB 313
Section: 5(d)
BRU: Senior Care
Supplemental Need: FY 04 costs for Senior Care program
$154,000 general funds
SB 313
Section: 5(e)(1)
BRU: Alaska Longevity Programs Mgmt
Supplemental Need: FY 04 costs for Senior Care program
$46,000 general funds
SB 313
Section: 5(e)(2)
BRU: Health Purchasing Group
Supplemental Need: FY 04 costs for Senior Care program
$85,000 general funds
SB 313
Section: 5(e)(3)
BRU: Public Assistance Administration
Supplemental Need: FY 04 costs for Senior Care program
$25,000 general funds
SB 313
Section: 5(e)(4)
BRU: Public Assistance Data Processing
Supplemental Need: FY 04 costs for Senior Care program
$6,800 general funds
Ms. Clarke explained that these sections would appropriate
general funds to allow the Senior Care program to begin on
April 1, 2004. The Senior Care program is more expensive than
the Alaska Senior Assistance Program because of the benefits
it offers. The Department needs the funds requested in Section
5(d) for the additional program costs. Sections (e)1, 2, 3 and
4 would also appropriate funds to cover program operating
costs. These appropriations would enable the Department to
begin the Senior Care program on April 1, 2004.
SB 314
Section: 8(a)
BRU: Pioneer Homes
Supplemental Need: Transfer within H&SS to cover
projected funding shortfalls as part of net-zero general
fund supplemental.
$711,900 general funds
SB 314
Section: 8(a)
BRU: Pioneer Homes
Supplemental Need: Excess authority from discontinued
Longevity Bonus payments relating to failed SB 117.
($775,000) Receipt Supported Services
SB 314
Section: 8(b)
BRU: Alcohol Safety Action Program
Supplemental Need: Operating expense belt tightening to
achieve net-zero general fund supplemental
($42,100) general funds
Ms. Clarke commented on the Departments' approach to the FY 04
supplemental. She continued to testify as follows.
Section 8 basically provides to the legislature a net-
zero delete add supplemental related to increasing costs
for Medicaid, for the catastrophic assistance and illness
assistance program, and for a shortfall we have in
revenue for the pioneers' homes. Overall, Madame Chair,
our shortfall is almost $29 million of general funds, and
we are coming to the legislature with a net-zero
[request], which finances that entire $29 million
internally.
The other important parts of our program and our plan
here is that this $29 million also includes what we are
calling "the gap" in our fair share receipts. We have a
ratification that we will talk about later, in FY 02. Our
budgeted amount for fair share is about $55 million. We
receive revenue, its varied anywhere from $33 to $37
million so there is a gap in our revenue, in our receipt
that we are earning from fair share. This also takes care
of that problem for FY 04, which is why the number is so
high.
The other important part of our proposal is that we went
to the Legislative Budget and Audit Committee this summer
with an one-time increase in pro-share receipts that we
believed we could earn because of the federal fiscal year
and the State fiscal year, and in that quarter where we
have the first State [federal] quarter and the final
State fiscal year quarter, we were able to do a one-time
increase in pro-share receipts, and the Legislative
Budget and Audit Committee asked us to come back to them
with a full accounting of that pro-share. We are using,
in this plan, the $14 million that we had identified of
those pro-share receipts in our net-zero supplemental. So
I want to make sure that the Committee understands that
as well.
In general, Madame Chairman, in addition to the pro-share
payments, we were also able to continue to look to
enhancements in federal revenue, and we are continuing to
look at other efficiencies in our operations to come up
with the balance of the $15 million of general funds to
make this a net-zero supplemental.
In your back up, you have a memo that the Commissioner
sent to all divisions outlining a belt tightening process
to allow us to generate the general fund savings that you
see in the net-zero supplemental. We are taking a hard
look at filling vacancies except if they are essential or
have to do with a life-health safety of clients.
SFC 04 # 19, Side B 09:52 AM
Ms. Clarke continued to testify as follows.
We are also taking a tough look at any contracts we are
going to renew. We also did an extensive review of all of
our grants, and there were several grantees that had not
spent funds in the first half of the fiscal year, and we
were able to reduce those as well.
Ms. Clarke stated that the regular supplemental requests
reflect general cutbacks.
Co-Chair Wilken asked for the source of the funds in Section
8(i).
SB 314
Section: 8(i)
BRU: Senior/Disabilities Medicaid Services
Supplemental Need: Increased federal receipts for
Medicaid
$ 24,098,600 federal funds
Ms. Clarke replied that the funds reflect a federal increase
in Medicaid funding. All of the federal funds reflected in
Section 8 represent increased Medicaid funding.
Co-Chair Wilken asked if the Department was aware of these
federal increases last year.
Ms. Clarke replied that the Department anticipated Medicaid
cost containment measures but were unable to implement all of
them because many require regulation changes. She reported an
"incredible" growth in claims for Personal Care Attendant
program services for senior and disabled clients, which was
not expected. The cost of these services increased from $13
million to an anticipated $56 million for FY 06 if no cost
containment measures are implemented. This program has "gotten
out of control". She offered to further detail the situation
to the budget subcommittee.
Co-Chair Green clarified the annual increase from $13 million
to $56 million.
Co-Chair Wilken referred to a packet provided by the
Department of Health and Social Services titled "DHSS FY2004
Delete/Add Supplemental Request" [copy on file], and
specifically a chart on page 15. He used this chart to point
out that in 1998 the State spent $5.3 million on the Personal
Care Attendant program within the Division of Senior and
Disability Services, and in 2004 the State is expecting to
spend $53.1 million on this program.
Ms. Clarke informed that this program changed in FY 02 through
regulations adopted by the previous gubernatorial
administration. The Department needs to restrict staff working
hours, and make other changes to this program to slow program
cost increases.
Co-Chair Green asked whether these changes would require
legislation to enact.
Ms. Clarke replied the changes could be made through the
regulation process.
SB 314
Section: 8(j)
BRU: Nursing
Supplemental Need: Operating expense belt tightening to
achieve net-zero general fund supplemental
($188,600)
Senator Hoffman asked whether the State health services
savings being implemented in FY 04, specifically the cuts in
nursing positions, are one time savings, or if they will be
ongoing belt tightening measures.
Ms. Clarke responded that the belt tightening measures are a
one time savings; however, she did not expect that public
health nurses would agree that their positions will be "back
to normal" in FY 05. The Department has offered a proposal to
restructure public health nursing in the FY 05 budget.
Senator Hoffman voiced concern about the nursing cut backs and
expressed interest in hearing other measures under
consideration for restructuring public health nursing.
Senator Bunde cited demographic predictions by the Department
of Labor and Workforce Development indicating that the
majority of Alaska's population would be over the age of 65 or
under the age of five in the "relatively near future". He
asked how the growth of these programs equates to the changing
demographics, and how problematic is the issue.
Ms. Clarke attributed some of the program's growth to
demographics, as the fastest growing segments of the
population are seniors and disabled people. She remarked that
these services have become a "niche" in the market.
Senator Dyson informed that several states are saving
significant Senior Care funds by allowing seniors to direct
how their care is supplied, partially by allowing families to
subsidize care. He asked if the Department has been allowing
similar senior involvement, and whether legislation is needed
to allow that level of involvement.
Ms. Clarke responded that the Department would need to review
the issue to determine if legislation is needed. She added
that the Personal Care Attendant program is consumer driven.
The Department supports the program, but parameters need to be
established to hinder abuse of the program.
Senator Dyson commented on the consumer driven programs he has
heard about and observed, and expressed satisfaction in
learning that certain programs within the Department implement
consumer management.
Senator B. Stevens asked for clarification on the chart on
page 15 of the DHSS packet. He asked for a document that would
show the fund sources and their specific contribution to the
Division of Senior and Disability Services.
Ms. Clarke responded that a document could be produced.
Senator Dyson asked for an explanation of the waivers listed
on the chart on page 15 of the DHSS packet.
Ms. Clarke answered that the "AD Waiver" is the Adults with
Physical Disability Waiver, the "CCMC Waiver" is the Children
with Complex Medical Conditions Waiver, the "MRDD Waiver" is
the Mental Retardation or Developmental Disabilities Waiver,
and the "OA Waiver" is the Older Alaskans' Waiver.
Co-Chair Green asked for a more detailed explanation of
Section 8(a).
Ms. Clark explained that the Department has implemented this
net-zero budget plan by making internal fund transfers. The
revenue generated from pioneers' homes' resident fees have
dropped severely. The Department has been able to internally
reallocate $173,100, but the overall shortfall is $885,000.
The request for $711,900 from the general fund represents a
transfer of funds appropriated to other areas of the
Department, to the pioneers' homes to completely fund the
shortfall. She commented that it would be useful to further
discuss the declining enrollments of some of the pioneers'
homes in the Senate Health and Social Services Finance
Subcommittee. The pioneers' homes do not typically experience
the decline in revenue that is evident this year, and this
concerns the Department.
Co-Chair Green mentioned that senior citizens have more
assisted living facility options than they have had in the
past. These increased options may affect the demand for
pioneers' homes. She supported further discussion on this
issue.
Co-Chair Green asked if the pioneers' homes revenue shortfalls
were a result of increased operating costs.
Ms. Clarke replied that the shortfalls were a result of low
enrollment.
Co-Chair Green emphasized that this shortfall is significant
and unanticipated.
SB 314
Section: 8(d)
BRU: Front Line Social Workers
Supplemental Need: Operating expense belt tightening of
96.3 to achieve net-zero general fund supplemental and
anticipated additional Social Services Block Grant funds
of 150.0
($246,300) general funds
Co-Chair Green asked if the Department has sufficient federal
receipt authority to allow for the additional $150,000 in
Social Services Block Grants.
Ms. Clarke replied that the Department has sufficient revenue.
Co-Chair Green referenced Section 8(d) affecting the
Subsidized Adoptions and Guardianship program and stated that
this component request is historically a "huge issue". She
asked what contributed to the amount of this request such as
better planning, less program growth, or more funding in FY
03.
Ms. Clarke responded that all of those reasons contributed. In
the past, the Subsidized Adoptions and Guardianship program
has had large cost increases. The cost increase in FY 03 was
approximately nine-percent, but the forecasted growth had been
12-percent. The program is leveling off.
Co-Chair Green requested a spreadsheet that detailed all of
the Department's internal fund transfers.
Ms. Clarke stated that she would provide the spreadsheet.
SB 314
Section: 8(g)
BRU: Kenai Peninsula Youth Facility
Supplemental Need: 200.0 savings from delay in opening
the facility plus 112.4 in operating expense belt
tightening to achieve net-zero general fund supplemental
($312,500) general funds
Senator Hoffman asked if the $200,000 savings reflected a
contract that was not issued to the Kenai Peninsula Youth
Facility.
Ms. Clarke replied that the legislature provided the funding
to enable the Kenai Peninsula Youth Facility to begin
operations on July 1, 2004. However, there were delays in the
facility's opening, which made some of the contract funds
available for reappropriation.
Senator Hoffman asked specifically what the contracts were
for.
Ms. Clarke replied that she would get Senator Hoffman the
requested information.
SB 314
Department: Miscellaneous Claims
Section: NEW
BRU: Health and Social Services
Supplemental Need: Feb.23 Amd: miscellaneous claim of
$1,959.94
$2,000 general funds
Ms. Clarke explained that this appropriation addresses three
vendor claims relating to the State medical examiner. The
Committee should be receiving back up information regarding
this request.
Co-Chair Green asked about the Department's ratifications.
Ms. Clarke stated that Section 18(a)(3) was a ratification
from FY 02 relating to the Medicaid program and the statutory
designated program receipts from the Fair Share program. This
request reflects the shortfall between the amount the
Department budgeted for Medicaid, and the amount the
Department was able to earn. The Department typically
approaches the legislature two years after a fiscal year has
closed so that Legislative Budget and Audit Committee can
review the federal adjustments, and verify their accuracy. In
FY 02, the legislature implemented the fair share program. The
Department had anticipated receiving $55 million in receipts
from the tribal hospitals in payment back to the State. Only
$33 million was received. The Department is certain that no
additional receipts will be received. She added that the Fair
Share program's shortfalls have been included in the FY 04
supplemental request, so the Department would not be
requesting a ratification of this magnitude for FY 04.
Co-Chair Green confirmed that the legislature should not
anticipate a future ratification of this amount.
Ms. Clarke responded that approximately eight million dollars
has been proposed in the Department's FY 05 budget to close
the Fair Share programs shortfalls. She commented that this is
another issue that deserves further discussion in the Senate
Health and Social Services Finance Subcommittee.
Senator Hoffman referred to testimony given last year that
suggested that the State would be obligated to fund this $54
million of anticipated tribal hospital receipts. He asked how
this ratification amount would be reconciled.
Ms. Clarke responded that the Department had budgeted
approximately $55 million for the Fair Share program. The
earnings were $33 million. This ratification is the gap
between the estimated earnings and the actual earnings.
Ms. Clarke continued that the Department has a claim to the
funds that were not granted through the Fair Share program.
The Department has established a legal case in an attempt to
garner the funds; the case is currently being appealed.
Senator Hoffman asked what efforts were being expended to
ensure the payment of the shortfall, and the timeline of those
efforts. He also asked the likelihood of collecting the
shortfall.
Ms. Clarke responded that the Department has made numerous
efforts to come to a resolution; however the federal Appeal
Board has no restrictions on how long it considers an appeal.
Senator Hoffman restated his earlier question and asked if the
Department's efforts are reflected in the budget.
Ms. Clarke responded that the Department has made many
internal efforts to produce a favorable resolution. Department
staff has provided information to the necessary federal
agencies. She added that the Department could provide the
Committee information pertaining to these efforts. The
Department is confident in a favorable resolution.
Senator Hoffman asserted that this Department of Health and
Social Services supplemental budget request is the most
significant request, and the information provided is
insufficient.
Co-Chair Green commented that this supplemental request has
"some very, very interesting history". She had asked the
previous gubernatorial administration to address this
ratification by cutting the budget, but action was not taken
until Governor Murkowski came into office.
Department of Transportation and Public Facilities
SB 313
Section: 9(a)
BRU: Anchorage Airport Administration
Supplemental Need: Tenant improvement inspection
oversight. DOT will contract out management of the
extensive tenant building activity for the few months
prior to opening the terminal. Internal staff cannot
handle this level of one-time activity. Cost will not
affect FY 05 budget.
$200,000 International Airports Revenue Fund
JOHN MACKINNON, Deputy Commissioner of Highways and Public
Facilities, Department of Transportation and Public
Facilities, overviewed this request.
Co-Chair Green clarified that existing staff would be unable
to handle the significant increased activities.
SB 313
Section: 9(b)
BRU: Anchorage Airport Facilities
Supplemental Need: Concourse C operations costs of
planning and implementation of the consultant contract
(to be hired in March) and the first month (June) of
operations and maintenance.
$1,500,000 International Airport Revenue Fund
Mr. MacKinnon anticipated that all of the operation and
maintenance required for Concourse C would be conducted
through contract services. This request would allow the hiring
of a contract consultant who would develop a request for
proposals (RFP). The current annual cost estimate for the
contracted services is approximately six million dollars. This
request would allow the Department of Transportation to hire
the contract consultant, and would fund one month of Concourse
C operations. Concourse C is scheduled to open in June 2004.
Co-Chair Green asked if this expense was unanticipated when
the FY 04 budget was prepared.
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, testified
that the Department did know now the opening date of Concourse
C and had therefore been "hesitant" to request funding in the
original FY 04 budget.
SB 313
Section: 9(c)
BRU: Capital
Supplemental Need: Federal contract to perform
maintenance and operation for 5 years at Adak air
facility. Interest earnings must be spent on the Adak air
facility.
$10,000,000 Adak Airport Operations
Mr. MacKinnon informed that commercial air activity has begun
at this airport. The additional costs of this project would be
$13.5 million, which would be funded by various federal fund
sources over the next three years.
Co-Chair Green asked if future responsibility of the facility
would transfer to the State.
Mr. MacKinnon answered that it could, and noted the current
agreement is for five years.
SB 313
Section: 10(a)
BRU: Capital
Supplemental Need: Earmarked projects passed in January's
federal omnibus bill which must all be obligated before
September 30, 2004:
(1) Alaska Statewide Airports Runway and Related
Improvements (ED99)
$3,000,000 federal funds
$ 157,900 Alaska Industrial Development & Export
Authority (AIDEA) Dividend
(2) Fairbanks Terminal Redevelopment (ED99)
$1,000,000 federal funds
$ 52,700 International Airport Revenue Fund
(3) Kodiak Terminal Improvements (ED36)
$1,000,000 federal funds
$ 26,400 AIDEA Dividend
(4) University of Alaska Transportation Research
Center (ED99)
$2,000,000 federal funds
(5) Circumpolar Infrastructure Task Force, Arctic
Council and Northern Forum (ED99)
$1,000,000 federal funds
(6) Kotzebue Dust and Persistent Particulate
Abatement Research (ED40)
$1,000,000 federal funds
$ 250,000 AIDEA Dividend
(7) Coffman Cove/Wrangell/Petersburg Ferries and
Ferry Facilities (ED1-5)
$2,000,000 federal funds
$ 500,000 AIDEA Dividend
(8) Arctic Winter Games Transportation Improvements
(ED99)
$1,000,000 federal funds
(9) Ft. Wainwright Alternative Access and Chena
River Crossing (ED60)
$5,700,000 federal funds
$ 565,800 AIDEA Dividend
(10) Big Lake to Wasilla Pedestrian Trails (ED70)
$500,000 federal funds
(11) Kincaid Park Trail Connection (ED 50)
$900,000 federal funds
(12) Funny River Bridge Crossing (ED 90)
$5,000,000 federal funds
(13) Glacier Creek/Nome Bypass (ED39)
$3,000,000 federal funds
(14) McCarthy Creek Tram (ED 6)
$200,000 federal funds
(15) Bartlett Access Intersection Safety
Improvement (ED50)
$500,000 federal funds
(16) Nome Bypass Road (ED39)
$2,000,000 federal funds
(17) C Street Railroad Bypass (ED50)
$2,000,000 federal funds
(18) Chenega Road System (ED5)
$850,000 federal funds
(19) Craig Road Improvements (ED 5)
$1,000,000 federal funds
(20) Donlin Creek Road (ED6)
$10,000,000 federal funds
(21) False Pass Causeway and Road to the Terminus
of the South Arm Breakwater (ED37)
$3,000,000 federal funds
(22) Fairbanks Transit Bus Replacement (ED60)
$3,000,000 federal funds
(23) Girdwood Project (ED32)
$1,000,000 federal funds
(24) Hydaburg Road Improvement (ED5)
$2,000,000 federal funds
(25) Keystone Drive and Related Improvements (ED90)
$1,500,000 federal funds
(26) Lucille Street and Mack Drive Improvements-
Wasilla (ED14)
$1,000,000 federal funds
(27) Mat-Su Roads Improvement (ED70)
$3,000,000 federal funds
(28) North Pole Roads Lighting (ED11)
$950,000 federal funds
(29) North Slope Borough Road Improvements (ED40)
$3,000,000 federal funds
(30) Port of Ketchikan Ferry Facility (ED1)
$1,000,000 federal funds
(31) Seldovia-Homer-Jakolof Bay Halibut Cove Ferry
Planning and Design (ED35)
$2,000,000 federal funds
(32) Seward Road Improvements (ED35)
$2,000,000 federal funds
(33) Ship Creek Improvements (ED50)
$1,000,000 federal funds
(34) Sitka Road Improvements (ED2)
$1,500,000 federal funds
(35) University of Alaska Transportation Research
Center (ED99)
$2,000,000 federal funds
(36) Williamsport/Pile Bay Road Kenai (ED90)
$3,000,000 federal funds
(37) Winner Creek Trail Improvements (ED50)
$1,000,000 federal funds
(38) Yakataga River Bridge (ED5)
$3,000,000 federal funds
(39) Alaska Mobility Coalition Bus Replacement
$500,000 federal funds
(40) Coffman Cove Inner Island/Bus Terminal (ED1-5)
$1,500,000 federal funds
$ 375,000 AIDEA Dividend; ASLC Dividend
(41) Mobility Coalition
$500,000 federal funds
SB 313
Section: 10(b)
BRU: Capital
Supplemental Need: Fund source section for projects
listed in Section 10(a)
$0
Mr. MacKinnon explained that funding for a number of projects
was approved by federal omnibus legislation. This request is
necessary because certain confusions exist within the omnibus
bill. The language specifies that project funds must be
obligated by September 30, 2004, or the funds might lapse. By
including these projects in the fast track supplemental
budget, the Department could begin to process and obligate the
projects by September 30, 2004.
Co-Chair Wilken asked why this request could not be included
in the FY 05 capital budget. He also questioned the definition
of "obligate" in this context.
Mr. MacKinnon replied that "obligate" refers to the Department
satisfying certain criteria established by the federal
government in order to receive funds. The federal government
funds project costs as the State can exhibit need; therefore,
total project costs may not be obligated all at once.
Co-Chair Wilken clarified that the Department simply needs
authorization to begin the obligation process as early as
possible.
Mr. MacKinnon affirmed.
Senator Hoffman asked if the projects listed in this request
represent all of the projects approved by the omnibus
legislation.
Mr. MacKinnon responded that the projects listed represent
only a portion of the projects approved.
Co-Chair Green surmised this situation is different than from
the previous year.
Mr. MacKinnon affirmed.
Senator Hoffman asked about the projects not included in this
request, and what criterion was used to select the included
projects.
Mr. MacKinnon replied that the federal legislation includes
funds from various sources. Some of the proposed projects
would be funded with appropriations that could lapse in
September 2004. Therefore, these projects must be underway
before that date.
Senator Hoffman clarified that the projects, of which the
funding would not lapse, are included in the proposed FY 05
capital budget.
Ms. Slagle also noted that several airport projects are not
included in this supplemental request and would not be
included in the FY 05 capital budget either. She explained the
funding for these projects do not require additional
legislative approval.
Senator Hoffman requested additional information on this
request.
Ms. Slagle qualified that many of the projects are not
proposed at the request of the Department, but rather are
requests of local governments and other agencies.
Co-Chair Green asked if these projects are in lieu of, or in
addition to, "normal" projects.
Mr. MacKinnon replied that the language of the omnibus bill is
different than previous legislation. He stated that the
Department interprets this language to imply that the
appropriation would be made from existing funds allocated to
the State. Normally the language stipulates that specified
projects would be funded in addition to the regular project
funding supplied to the State. The Department has been assured
that this discrepancy would be corrected to provide that these
projects would not take funds from existing projects.
Co-Chair Green clarified that this federal appropriation would
change the usual method of determining Department of
Transportation and Public Facilities' capital projects.
Co-Chair Green asked if the legislature could select certain
proposed projects or whether all the projects must be accepted
as a package.
Mr. MacKinnon was unsure that the State would have the option
of not accepting particular projects. Many projects were
submitted by "other entities", and the Department has not
fully identified each of the projects. He reiterated that he
was unsure of the intent of the appropriation language, noting
that some of the projects appear to be duplicates of existing
proposed projects, although utilizing different fund sources.
Ms. Slagle added that the Department inquired about not
accepting certain projects. However, given the current
language of the federal appropriation, the State would lose
funds from its regular appropriation if it chose not to accept
a project.
Co-Chair Green assumed the Department is attempting to get
clarification on this language. She asked if this would be
determined before May 2004, when the FY 05 State budget would
be adopted.
Mr. MacKinnon agreed the Department is making efforts to
clarify the issue and has been assured that the language would
be amended to specify this federal appropriation is separate
than that for existing projects. However, he had no guarantee
of when this legislation would be amended.
Senator B. Stevens understood the proposed projects were
included in the federal omnibus transportation bill. He
clarified that the transportation portion of the omnibus
legislation should have been passed by October 1, 2003.
Senator B. Stevens expressed confusion about the possibility
that funding for these projects could be transferred from
appropriations for other surface transportation projects. He
asked if Congress had not approved the funding increase for
Alaska projects over the next six years.
Mr. MacKinnon informed of the two versions of the omnibus
bill, one adopted by the Senate and one by the House of
Representatives. A conflict exists between those versions and
the version supported by the President Bush administration.
None of the versions have been passed out of Congress.
Senator B. Stevens noted the appropriation included in the
Senate version is less than the appropriation included in the
House of Representatives version, and the appropriation in the
Bush administration version is even less.
Senator B. Stevens expressed concern in authorizing the
Department to consider and plan for certain projects and
project appropriations when the federal omnibus bill has not
yet passed, and may be adjusted.
Co-Chair Wilken referenced the projects included in Sections
10(a)(39) and 10(a)(41) that would provide funding for the
purchase of vehicles for disabled persons and nonprofit
organizations. He asked what organizations would receive this
funding and also asked the criteria to qualify for the funds.
Mr. MacKinnon replied the Alaska Mobility Coalition requested
the funding. The Department would administer the funding on
behalf of the Coalition.
Co-Chair Wilken pointed out the inaccuracy of the election
districts listed for the proposed projects.
Co-Chair Green assumed more information on this request would
follow.
Mr. MacKinnon affirmed and stated that the Department is
attempting to learn more specifics about the proposed
projects.
Senator Hoffman clarified Mr. MacKinnon is the contact for
further questions.
SB 313
State Debt
Section: NEW
BRU: Debt Service
Supplemental Need: Feb 23 Amd: Fund source switch of
$500,000 to the International Airports Revenue Fund from
Passenger Facility Charges ($500,000) for debt service on
international airports revenue bonds. The $500,000 of
PFCs will be used for capital projects appropriated in
prior years from this fund source.
$0.0 Passenger Facility Charges; International Airports
Revenue Fund
Ms. Slagle reviewed this amendment and explained that the
Commissioner of the Department of Transportation and Public
Facilities had reached an agreement with the signatory
airlines, which specified that debt service contributions made
by Passenger Facility Charges would not exceed two million
dollars on an annual basis. This amendment would enable the
agreement.
Co-Chair Green questioned the component title of the amendment
on the spreadsheet dated February 23, 2004, which is listed as
"State Debt".
Ms. Slagle clarified that this amendment would specifically
affect the debt reimbursement of the Anchorage International
Airport.
SB 314
Section: 17(a)
BRU: Capital
Supplemental Need: Proceeds from the 2003 sale of the MV
Bartlett will be spent on the new Prince William Sound
marine highway maintenance facility in Cordova. This and
the $900,000 authorization requested in the FY 05 capital
budget will complete the project
$389,500 Marine Highway System Fund
Ms. Slagle informed that federal regulations, Title 23,
stipulate that any the proceeds from the sale of a vessel in
which federal highway funds were used for its initial purchase
or renovation, must be utilized for an eligible project of the
same purpose or be returned to the federal government.
Co-Chair Green asked if the proposed maintenance facility is
eligible for these funds.
Ms. Slagle answered it is.
SB 314
Section: 17(b)
BRU: NR Leasing and Property Management
Supplemental Need: Funds needed due to legal challenges
to recent changes in airport leasing rates in AS 17.
$ 50,000 Receipt Supported Services
Ms. Slagle told of the legal issues resulting from leases at
the Deadhorse airport. She stated that leases at rural
airports in Alaska are about one-half of the fair market value
and that this dispute is a result of the Department's attempts
to implement the regulations.
SFC 04 # 20, Side A 10:40 AM
Senator Bunde asked if the leasers were suing to maintain
their subsidy.
Ms. Slagle clarified the parties are not suing the State,
rather just appealing the implementation of the regulations.
Senator Bunde commented that the leasers had been receiving a
substantial subsidy and are appealing the reduction of that
subsidy.
Co-Chair Green informed that she has been following this
matter and that the issue is not straightforward.
SB 314
Section: 17(c)
BRU: CR Hwys and Aviation
Supplemental Need: Snow hauling in Anchorage. Funds
budgeted in FY 04 have been exhausted due to the heavy
snowfall so far this winter. Additional costs of removing
snow from Anchorage sidewalks are included in this
request.
$200,000 general funds
Ms. Slagle reported that Anchorage had received a total of 76
inches of snow as of a couple of weeks ago, which is three
feet more than normal. In FY 04 the Department had allocated
$500,000 for snow haul purposes and $696,500 had been expended
to date for snow removal activities.
Co-Chair Green asked if snow-hauling activities encompassed
airport maintenance as well as roadway maintenance.
Ms. Slagle corrected this funding would be expended only for
the streets in downtown Anchorage that the State is
responsible to maintain.
Senator B. Stevens clarified this funding is for State-
maintained roads located in Anchorage and not for those roads
included in the Anchorage Metropolitan Area Transportation
Solutions (AMATS) program.
Ms. Slagle affirmed.
Co-Chair Green asked if additional expenses were not incurred
in areas surrounding downtown Anchorage.
Mr. MacKinnon explained that snow storage in urban areas does
not exist and that after a certain amount of accumulation, the
snow must be removed from the area. By contrast, he stated
that other areas along State-maintained highways have
sufficient snow storage.
Co-Chair Wilken cautioned that granting this request would
establish an undesirable precedence.
SB 314
Section: 17(d)
BRU: SE Hwys and Aviation
Supplemental Need: Funds needed due to legal challenges
to recent changes in airport leasing rates in AS 17.
$50,000 Receipt Supported Services
Ms. Slagle stated this section relates to leases held by the
Yakutat airport and a dispute in the best interest finding
award of an airport lease.
Co-Chair Green asked if the Department usually requests
funding for legal challenges.
Ms. Slagle replied these expenses are unusual, and that the
leasing budgets are limited and unable to absorb the costs of
large legal disputes. She furthered that legal issues on
leases are uncommon.
Co-Chair Green did not recall such funding requests in
previous years.
SB 314
Section: 17(e)
BRU: Marine Vessel Operations
Supplemental Need: Masters, Mates and Pilots union has
ratified its contract as of January 1, 2004. In the FY 04
budget, the Legislature appropriated $60,500 to cover a
full year's monetary term cost, but six months of the
appropriation is not needed.
($30,200) Marine Highway System Fund
Ms. Slagle outlined this return of funds.
Department of Community and Economic Development
SB 314
Section: 2(a)
BRU: Regulatory Commission of Alaska Audits &
Investigations
Supplemental Need: Additional funds for expert witness
costs are required for a) completion of Alaska
Communications Systems cases ($20,000), b) Enstar case
participation ($15,000), c) assistance on the telecom
regulations preceding responsive to HB 111 ($20,000), d)
participation in other cases ($60,000).
$115,000 RCA Receipts
SB 314
Section: 2(b)
BRU: Regulatory Commission of Alaska
Supplemental Need: Due to major developments in Cook
Inlet and the Trans Alaska Pipeline System, the
Regulatory Commission of Alaska's effort in regulating
pipelines has significantly increased. To provide the
necessary expertise two new positions, a range 21
Research Analyst IV and a range 19 Utility Financial
Analyst are requested. Funds for additional office space,
furniture and equipment are also requested.
$114,600 RCA Receipts
TOM LAWSON, Director, Division of Administrative Services,
Department of Community and Economic Development, testified
that Sections 2(a) and 2(b) relate to the Regulatory
Commission of Alaska (RCA), and are funded by RCA receipts. He
briefly explained the two requests.
MARK JOHNSON, Commissioner and Chair, Regulatory Commission of
Alaska, Department of Community and Economic Development,
testified via teleconference from Anchorage, that the request
in Section 2(a) relates to the Audits and Investigations
section of the RCA, which is under the supervision of the
State Attorney General per Executive Order #111. The Office of
the Attorney General has requested certain expert witness fees
regarding four particular issues. He emphasized the
reasonableness of the request.
Mr. Johnson noted that Section 2(b) relates to an increase in
the regulatory filings involved in the intrastate transport of
natural gas. A separate commission formerly supervised this
function, but it was merged into the Alaska Public Utilities
Commission, the predecessor of the Regulatory Commission of
Alaska. Regulatory filings have increased particularly in the
Cook Inlet region and the North Slope region. Additional staff
is needed to handle the increased regulatory filings
expeditiously in order to "enable economic development in the
oil fields."
SB 314
Section: 2(c)
BRU: Capital
Supplemental Need: Repeal of funds to Saxman for Public
Safety Bldg sec. 87, ch. 1, SSSLA 2002, pg. 138, In 9.
Actual grant amount is $1,074,341
($1,074,300) general funds
Mr. Lawson informed that this would repeal the appropriation
that was granted to the City of Saxman for construction of a
public safety facility. This facility would be built elsewhere
in the Ketchikan Borough.
SB 314
Section: 2(d)
BRU: Power Cost Equalization
Supplemental Need: PCE Endowment fund appropriation to
PCE fund to replace the general funds requested in the FY
05 budget. This is the balance of the statutory 7% limit
of the PCE Endowment monthly average market value for
appropriation in FY 04. An FY 05 budget amendment will
also be submitted.
$4,581,000 PCE Endowment Fund
Mr. Lawson stated this appropriation would fund the Power Cost
Equalization (PCE) program. He explained that this request
would compensate for an FY 05 budget shortfall. It would also
replace $3.7 million of general funds requested in the FY 05
operating budget. The FY 04 operating budget authorized a
withdrawal of up to $12.6 million from the PCE Endowment fund.
In FY 04 $7.9 million was transferred from the PCE Endowment
fund into the PCE fund. The PCE fund reached its $15.7 million
funding level after a one-time National Petroleum Reserve-
Alaska (NPR-A) appropriation. Approximately $4.6 million of
the PCE Endowment fund remains available for withdrawal, and
this request would authorize a transfer from the PCE Endowment
fund to the PCE fund. This appropriation would be used in FY
05 to fully fund the PCE fund.
Department of Corrections
SB 314
Section: 3(a)
BRU: Inmate Health Care
Supplemental Need: The cost of drug and scientific
supplies continue to rise annually and contractual costs
have increased due to eight catastrophic cases, each
costing in excess of $100,000.
$1,100,000 general funds
JERRY BURNETT, Director, Division of Administrative Services,
Department of Corrections, testified this request would
provide for the increased costs of contractual services and
medical supplies.
SB 314
Section: 3(b)
BRU: Out of State Contracts
Supplemental Need: Due to increases in population and
subsequent management of placement of prisoners, the out
of state contracts and related travel costs are
increasing from the budgeted 650 prisoners to in excess
of 775 by the end of FY 04.
$920,000 general funds
Mr. Burnett told of the increased number of Alaskan inmates
housed in a correctional facility in Arizona. He qualified
that the actual need could be less than the need reflected in
this request and that a subsequent adjustment would be made
once the actual number of inmates is determined.
Senator Bunde asked if Section 3(a) included pharmaceutical
costs.
Mr. Burnett responded that pharmaceuticals are one component
of the request in Section 3(a) because pharmaceutical costs
have gone up by more than 20%, and an increasing number of
inmates have pharmaceutical needs.
Senator Dyson reminded of the previous appearance of this
witness before the Committee when Senator Dyson complemented
the Department on its care of inmates. He recalled his earlier
questioning of how the legislation could verify the truth in
the Department's reporting. He clarified he did not intend to
infer disbelief in the reporting.
Mr. Burnett detailed that an "open [reporting] process" exists
within the State's correctional institutions.
Senator Dyson furthered that inmates are not prevented from
reporting complaints to the legislature or others.
Mr. Burnett affirmed, and added that daily communications
occur between the correctional facilities and people in the
community.
Senator Dyson apologized for his earlier comments, and thanked
the Department for their good record.
Department of Education and Early Development
SB 313
Section: NEW
BRU: Alyeska Central School
Supplemental Need: Feb 23 Amd: Additional operating
costs of $653,736
$653,700 general funds
KAREN REHFELD, Deputy Commissioner, Department of Education
and Early Development, testified that in the previous
legislative session, the legislature provided the Alyeska
Central School (ACS) funding for a one-year transition to be
incorporated by a local school district. A school district has
expressed interest in assuming the program and is undergoing
the process for establishing a charter school to operate the
correspondence program. The projected budget assumed the
enrollment of 800 students, and actual enrollment has declined
by nearly one-half, possibly due to uncertainty of the future
of the program. The lack of enrollment will create an
approximately $1.3 million loss in revenue. In addition, many
staff members have resigned. The Department needs
approximately $654,000 to complete the program for the
students enrolled, and to complete the incorporation of the
ACS into a local school district.
Co-Chair Green asked the consequences of not providing the
requested additional funding.
Ms. Rehfeld replied the program would be unable to "make
payroll". The staff would be laid off, and the educational
program would be discontinued.
SB 314
Section: 4(a)
BRU: Foundation
Supplemental Need: FY 04 foundation program entitlement
adjustment based on actual student count.
($3,654,000) general funds
Ms. Rehfeld stated the surplus of funds is the result of
decreased enrollment.
Senator Bunde asked the number of fewer students and whether
the impact of the decreased enrollment was more noticeable in
certain parts of the State.
Ms. Rehfeld replied that the overall reduction in enrollment
is approximately 1,500 students. She deferred to Eddie Jeans.
EDDIE JEANS, Manager, School Finance and Facilities Section,
Education Support Services, Department of Education and Early
Development, testified he would provide a comparison of the
student count of the previous year to the current year and a
school district comparison. He informed that the enrollment in
public and community schools reduced by approximately 1,800
students while the enrollment of correspondence programs
increased by 382 students.
Senator Bunde clarified that he is interested in whether a
large percentage of the decreased enrollment occurred in one
part of the State.
Mr. Jeans told of decreased enrollment in the Kenai Peninsula
School District, although no major population decreases have
occurred in the area. However, he commented that the decrease
in enrollment has not been concentrated in one part of the
state.
Senator Bunde asked if a method exists to track student
movements as they change schools.
Mr. Jeans told of the student identification system that could
track students as they move around the State, but this system
has only been in place for three years. Therefore, the data is
not yet meaningful.
Co-Chair Green asked if enrollment in public schools is a net
decrease.
Mr. Jeans answered yes.
SB 314
Section: 4(b)
BRU: Pupil Transportation
Supplemental Need: Pupil transportation program
adjustment based on actual student count
($788,400) general funds
Ms. Rehfeld outlined this item.
SB 314
Section: 16(a)
BRU: School Debt Reimbursement
Supplemental Need: FY 04 entitlement adjustment based on
actuals, down from $37,424,100 to $32,052,000
($3,399,900) Debt Funds
Supplemental Need: FY 04 Cigarette Tax revenue increase
adjustment from $28,600,000 to $30,572,200
$1,972,200 School Fund
SB 314
Section: 16(a)
BRU: School Debt Reimbursement
Supplemental Need: FY 04 Debt Retirement Fund decrease
from $37,424,100 to $32,052,000 that corresponds with the
increase in cigarette tax revenue
($1,972,200) Debt Fund
Ms. Rehfeld overviewed these items.
Department of Military and Veterans Affairs
JOHN CRAMER, Director, Division of Administrative Services,
Department of Military and Veterans' Affairs, testified that
an earlier spreadsheet detailing the proposed amendments to
the regular supplemental budget stated the Department of
Military and Veterans' Affairs request would be appropriated
from the general fund, when it would actually be appropriated
using federal funds.
SB 314
Section: 11(a)
BRU: Homeland Security and Emergency Services
Supplemental Need: Transfer of federal authorization from
Army Guard to Homeland Security for increased FEMA grants
$767,000 general funds
SB 314
Section: 11(b)
BRU: Army Guard Facilities Maintenance
Supplemental Need: Transfer of federal authorization from
Army Guard to Homeland Security for increased FEMA grants
($767,000) general funds
Mr. Cramer detailed these requests.
Co-Chair Green asked if these would be technical amendments.
Mr. Cramer affirmed, and stated that this is a net-zero
request.
Senator Dyson asked if the Department had too much funding for
maintenance.
Mr. Cramer replied affirmed and added that the Department has
"excess authorization".
Co-Chair Green noted that a committee substitute would be
prepared that would include the Governor's proposed
amendments, at which time the Committee would determine which
projects to approve. She requested member input.
Co-Chair Wilken referenced a chart on page 15 of the packet
provided by the Department of Health and Social Services
titled "DHSS FY2004 Delete/Add Supplemental Request"
indicating increases in disability services. He expressed
interest in the details of this issue.
Co-Chair Green agreed that the growth of disability services
is an important issue.
Co-Chair Wilken commented on the dramatic growth of certain
Department of Health and Social Services' programs illustrated
in the chart.
Senator Dyson mentioned that the states that are allowing
consumer-directed health services have set base rates that
cannot be exceeded. These restrictions prevent the State from
overspending while allowing consumers to determine the
specifics of their care. He added that consumer directed
services are "a fascinating concept".
Co-Chair Green commented on the unpredictable impacts of the
negotiated rate process in Alaska.
Co-Chair Green ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 11:10 AM
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