Legislature(2003 - 2004)

03/04/2004 09:02 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 04, 2004                                                                                      
                              9:02 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 30, Side  A                                                                                                            
SFC 04 # 30, Side  B                                                                                                            
SFC 04 # 31, Side  A                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened the meeting at approximately 9:02 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                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Also  Attending:   DEB DAVIDSON,  Staff  to Co-Chair  Green;  JANET                                                           
CLARKE, Director,  Division of Administrative Services,  Department                                                             
of Health  and Social  Services;  PETE KELLY,  former Senator,  and                                                             
Director,  State  Relations,  University  of Alaska;  LINDA  PEREZ,                                                             
Administrative  Director,  Division   of Administrative   Services,                                                             
Office  of  the  Governor;  DAN  SPENCER,   Director,  Division  of                                                             
Administrative Services,  Department of Public Safety;  MIKE MAHER,                                                             
Director,  Division  of Information  and  Administrative  Services,                                                             
Department  of Environmental  Conservation;  DAN EASTON,  Director,                                                             
Division of Water, Department of  Environmental Conservation; LARRY                                                             
DIETRICK,  Director, Division  of  Spill Prevention  and  Response,                                                             
Department of Environmental Conservation;                                                                                       
                                                                                                                                
Attending via Teleconference:  From an offnet location: PAT PITNEY,                                                           
Director  of   Budget  Development   and  Institutional   Planning,                                                             
University of Alaska                                                                                                            
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB   1-INCREASE AMT OF BASE STUDENT ALLOCATION                                                                                  
                                                                                                                                
The Committee adopted an amendment. The bill was held in Committee.                                                             
                                                                                                                                
SB  35-APPROPRIATIONS: K-12, UNIVERSITY, CBRF                                                                                   
                                                                                                                                
The Committee adopted a committee  substitute and reported the bill                                                             
from Committee.                                                                                                                 
                                                                                                                                
SB 257-APPROP: CAPITAL PROJECTS                                                                                                 
                                                                                                                                
The Committee heard presentations from the Department of Health and                                                             
Social  Services,  the University  of  Alaska,  the Office  of  the                                                             
Governor,  the Department of  Public Safety  and the Department  of                                                             
Environmental Conservation  on their budget requests.  The bill was                                                             
held in Committee.                                                                                                              
                                                                                                                                
Co-Chair   Green  recommended   Committee   members  begin   budget                                                             
subcommittee work.                                                                                                              
                                                                                                                                
Senator  Bunde  asked the  timeframe  for  presenting  subcommittee                                                             
budget closeouts to the full Committee.                                                                                         
                                                                                                                                
Co-Chair Green  stated she would  provide that information,  noting                                                             
that scheduling adjustments were necessary due to the Legislature's                                                             
commitment  to address Alaska  Permanent Fund  matters the  week of                                                             
March 15.                                                                                                                       
                                                                                                                                
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 1                                                                                   
     "An Act relating to the base student allocation used in the                                                                
     formula for state funding of public education; and providing                                                               
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This was  the first  hearing for  this bill  in the Senate  Finance                                                             
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  this bill "increases the student  dollar in                                                             
our  base  student  allocation  in  our  foundation   formula."  He                                                             
remarked, "all  of us have  heard the school  bell; it's  rung" and                                                             
that that this legislation  is the start of addressing  the need of                                                             
adequate funding for education.                                                                                                 
                                                                                                                                
AMENDMENT #1: This amendment increases  the base student allocation                                                             
from the existing $4,169 currently provided in AS.14.17.470 and the                                                             
$4,263 amount proposed in the bill, to $4,576.                                                                                  
                                                                                                                                
Co-Chair Green moved  for adoption and commented that  although she                                                             
supports this legislation, this  amendment would be an improvement.                                                             
                                                                                                                                
AT EASE 9:05 AM / 9:06 AM                                                                                                       
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Co-Chair Green noted this amendment would increase the base student                                                             
allocation, and result in an approximately  $82 million increase to                                                             
the foundation  funding formula distributed  across the  state over                                                             
the FY 04 budget year.                                                                                                          
                                                                                                                                
Senator  Bunde asked  the  increase per  student  over the  current                                                             
funding amount.                                                                                                                 
                                                                                                                                
Co-Chair Green replied $407.                                                                                                    
                                                                                                                                
Senator Bunde asked the reason for this amount of increase.                                                                     
                                                                                                                                
Co-Chair  Green relayed  concerns expressed  regarding funding  for                                                             
each school district, along with  the unanticipated increased costs                                                             
of the Public Employees  Retirement System (PERS) and  the Teachers                                                             
Retirement System  (TRS) and increased insurance expenses  of up to                                                             
ten percent,  which  the school  districts could  not control.  She                                                             
shared that she has received comments  from some districts that she                                                             
has never before heard from, that despite efforts to control costs,                                                             
increased funding  for these expenses  are necessary. She  informed                                                             
that this funding increase would  allow districts to budget for the                                                             
next two years.                                                                                                                 
                                                                                                                                
Senator Bunde  remarked that his was  "well aware" of  the PERS/TRS                                                             
"problem" but expected  it should be funded separately  rather than                                                             
"lock it in" to the base student allocation. He supported utilizing                                                             
the earnings  reserve fund for these  expenses. He also  noted that                                                             
although this  increase would eliminate  the budget deficit  of the                                                             
Anchorage  School District,  it would also  increase the  allowable                                                             
local  contribution.  He  characterized   this  proposal  as  "good                                                             
news/bad news."                                                                                                                 
                                                                                                                                
Co-Chair Green hoped that most of the districts that have requested                                                             
the  legislature solve  the funding  problem  understand that  this                                                             
proposed increase would increase the local funding limits and allow                                                             
districts to increase  local contributions. She remarked  that this                                                             
would  allow  community  members  to "participate"  in  the  fiscal                                                             
situation  of their school  districts. She  also expressed  that no                                                             
funding increases would be requested  the following year, given the                                                             
total  increase  of  the  foundation   funding  formula  and  funds                                                             
generated locally.  She predicted  this increase would  address the                                                             
PERS/TRS situation  for one to  two years, although she  understood                                                             
that a  multiple year  solution of  five to  twenty years would  be                                                             
required. She  remarked that this  increase should convey  that the                                                             
legislature is accepting  responsibility and that local  government                                                             
taxpayers and citizens should also accept responsibility.                                                                       
                                                                                                                                
Senator  Bunde pointed  out  that 24  districts  would not  provide                                                             
increased local  contributions because  they make no  contributions                                                             
currently.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  commented  that  some  school  districts  do  not                                                             
contribute  to  the  education  expenses  in  their  community  and                                                             
therefore  those  districts  would   not  receive  increased  local                                                             
funding.                                                                                                                        
                                                                                                                                
Senator  Hoffman  asked  if  the intention  is  that  the  PERS/TRS                                                             
expenses  would be  addressed within  the  base student  allocation                                                             
funding, and whether this funding  would be sufficient according to                                                             
school districts' estimates. He  understood from meetings with some                                                             
school  district   representatives   that  this  funding   plus  an                                                             
additional one-time allocation is necessary.                                                                                    
                                                                                                                                
Co-Chair  Green  shared  that  the  funds   indicated  by  district                                                             
representatives as  necessary for the PERS/TRS and  other increases                                                             
would be provided  for in the amendment.  She predicted  that these                                                             
funds would be adequate for most of the larger school districts but                                                             
qualified  that some smaller  districts could  have an anomaly  and                                                             
require a different solution. She  stated that this amendment would                                                             
provide  funding necessary  for the PERS/TRS  increased expense  in                                                             
those districts she addressed.                                                                                                  
                                                                                                                                
Senator  Hoffman  pointed  out  this   funding  increase  would  be                                                             
statutory and does  not address the operating budget.  He asked how                                                             
this proposal compares  to Governor Murkowski's budget  request and                                                             
his plans, noting that the Governor  has announced he would support                                                             
a draw from the CBR of no more than $400 million for FY 05 and that                                                             
the  legislature  must  generate  an  additional  $200  million  in                                                             
revenue,  while  this  amendment  would  increase  the  budget  $82                                                             
million.  Senator Hoffman  asked if  the intent  would be that  the                                                             
legislature would increase the  amount of revenue generated to $282                                                             
million,  or  reduce  other  appropriations   to  accommodate  this                                                             
increase. He recalled the Governor's  comments to the Conference of                                                             
Alaskans emphasizing his adamancy about dramatic budget reductions.                                                             
Senator Hoffman asked  Co-Chair Green if the intent  is to meet the                                                             
Governor's expectation  of withdrawing  no more than $400  from the                                                             
CBR.                                                                                                                            
                                                                                                                                
Co-Chair  Green  replied that  this  amendment  this is  the  first                                                             
portion  of  the  budget process  and  represents  an  $88  million                                                             
increase  for education.  She anticipated  that the Governor  would                                                             
support this  funding increase because  he supports education;  she                                                             
anticipated "great cooperation".                                                                                                
                                                                                                                                
Senator Hoffman supported the concept of this amendment; however he                                                             
countered  that the  Governor  also supports  operating  government                                                             
without withdrawals from the CBR.  He pointed out that the governor                                                             
has a "red  pen" i.e. authority to  exercise the line item  veto on                                                             
appropriation  legislation   and  has  the  final  say  unless  the                                                             
legislature overrides the veto with a three-quarters majority vote.                                                             
Senator Hoffman  remarked this  is a high  standard. He  emphasized                                                             
that he supports  education funding  but needed assurance  from Co-                                                             
Chair  Green that  the governor  would  also support  an  increased                                                             
budget and not exercise  the line item veto authority  to limit the                                                             
CBR draw to $400 million.                                                                                                       
                                                                                                                                
Co-Chair Green reiterated  this is the first portion  of the budget                                                             
process  and that  more would  be known  in the  coming weeks.  She                                                             
informed that she has been in discussions with the Governor.                                                                    
                                                                                                                                
Senator Hoffman asked if Governor Murkowski exercised the line item                                                             
veto, whether  the legislature would  "take a stance"  and override                                                             
those vetoes.                                                                                                                   
                                                                                                                                
Senator Hoffman  agreed with this  increased funding for  education                                                             
and  that  it  should  be  appropriated   before  the  end  of  the                                                             
legislative  session, provided that  the Senate Minority's  goal to                                                             
spend monies from the CBR as a last option is achieved.                                                                         
                                                                                                                                
Senator  Bunde noted  he has heard  this amendment  would cost  $82                                                             
million and also $88 million and asked the correct amount.                                                                      
                                                                                                                                
Co-Chair Wilken stated  that the cost of SB 1, as amended  would be                                                             
$82 million.                                                                                                                    
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  and  the  amendment  was                                                             
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Wilken noted those present to testify to this bill.                                                                    
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
AT EASE 9:23 AM / 9:23 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 35                                                                                  
     "An Act making appropriations for the operating and loan                                                                   
     program  expenses of state  government, for certain  programs,                                                             
     and to capitalize funds; 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."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the first  hearing for  this bill  in the Senate  Finance                                                             
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken noted this  legislation,  sponsored by the  Senate                                                             
Rules Committee at the request  of the Governor, proposes the FY 04                                                             
operating  budget  and  was  first  heard  in  the  Senate  Finance                                                             
Committee on April  14, 2003. He noted the distribution  to members                                                             
of a proposed committee substitute, Version "U".                                                                                
                                                                                                                                
Senator Hoffman distributed a legal  opinion issued by Tamara Cook,                                                             
Director  of the  Division of  Legal and  Research Services,  dated                                                             
March 3, 2004,  relating to the  principles of the Public  Meetings                                                             
Act, specifically  to adequate notice of hearings on  legislation.                                                              
                                                                                                                                
Senator Hoffman commented  to the importance to the  public to know                                                             
which legislation would be heard in a committee. He understood that                                                             
a bill could be brought  before a committee without  advance notice                                                             
if that bill had been previously noticed for a hearing; however, he                                                             
remarked  it is unreasonable  to  expect the  public to  adequately                                                             
track each bill that has had a previous hearing.                                                                                
                                                                                                                                
Senator  Hoffman was  unaware that  this bill would  be brought  up                                                             
until late the previous  night and cited the last paragraph  of the                                                             
aforementioned memorandum as follows.                                                                                           
                                                                                                                                
     The  Select Committee  on Legislative  Ethics is charged  with                                                             
     determining how the legislative  ethics statutes, including AS                                                             
     24.60.037, apply to certain fact situations. (AS 24.60.160) I,                                                             
     frankly, have  no idea whether any subject matter  notice of a                                                             
     meeting is required  under AS 24.60.037 or, if  it is, whether                                                             
     the  notice   provided  in  the  situation  you   describe  is                                                             
     inadequate   for  purposes  of   adhering  to  open   meetings                                                             
     principles. In any case, advice I might give is not binding on                                                             
     the Select Committee. (AS 24.60.158)                                                                                       
                                                                                                                                
Senator  Hoffman stated  that as a  layperson, he  was unsure  that                                                             
consideration of this bill would  meet the requirements of the Open                                                             
Meetings  Act, so  he therefore  requested a  determination by  the                                                             
Select Committee on Legislative Ethics. He therefore requested that                                                             
no action  be taken on this legislation  until adequate  notice has                                                             
been provided.                                                                                                                  
                                                                                                                                
Co-Chair Green moved  to adopt CS SB 35, 23-GS1002\U,  as a working                                                             
document.                                                                                                                       
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Co-Chair  Green explained  this  committee substitute  provides  an                                                             
increase to the education foundation funding formula.                                                                           
                                                                                                                                
AT EASE 9:28 AM / 9:28 AM                                                                                                       
                                                                                                                                
DEB DAVIDSON, Staff to Co-Chair  Green, detailed that the committee                                                             
substitute appropriates funds for K-12 education and the University                                                             
of Alaska  in the  amount requested  by Governor  Murkowski in  his                                                             
proposed  FY  04  budget.  She furthered  that  Section  3  of  the                                                             
committee substitute  contains standard language to  transfer funds                                                             
from the Constitutional  Budget Reserve (CBR) fund.  Section 4, she                                                             
concluded,  provides  language  stipulating  that  contingent  upon                                                             
approval of access to the CBR with a three-quarter-majority vote of                                                             
both bodies of the  legislation; an additional appropriation  could                                                             
be made to K-12 education and the University of Alaska.                                                                         
                                                                                                                                
Senator Bunde  asked the amount of  funding for FY 04  requested by                                                             
the Governor.                                                                                                                   
                                                                                                                                
Ms. Davidson  replied that the  allocations provided in  Sections 1                                                             
and 2  for K-12  education  and the  University of  Alaska are  the                                                             
amounts requested  by the governor based on the current  foundation                                                             
funding formula.                                                                                                                
                                                                                                                                
Senator  Bunde identified  the $82 million  referenced earlier  and                                                             
asked  if $5.8  million  was  the intended  appropriation  for  the                                                             
University of Alaska.                                                                                                           
                                                                                                                                
Ms. Davidson affirmed.                                                                                                          
                                                                                                                                
Senator Bunde asked the reason for this amount.                                                                                 
                                                                                                                                
Co-Chair  Green  responded  this  funding  is  intended  to  offset                                                             
increased   University  expenditures   for  the  Public   Employees                                                             
Retirement System (PERS) and the  Teachers Retirement System (TRS).                                                             
                                                                                                                                
Senator Bunde asked if the PERS/TRS  cost to the University is $5.8                                                             
million.                                                                                                                        
                                                                                                                                
Co-Chair  Green  answered   the  cost  is  higher,  and  that  this                                                             
appropriation would provide a portion of the necessary funds.                                                                   
                                                                                                                                
Senator Bunde commented that this  appropriation would not fund the                                                             
entire amount, despite  the challenge to raise the  remaining funds                                                             
necessary.                                                                                                                      
                                                                                                                                
Co-Chair  Green replied that  certain employees  of the  University                                                             
might not  be included in the PERS/TRS  programs, and  instead hold                                                             
federally funded or grant funded positions.                                                                                     
                                                                                                                                
Senator  Hoffman  requested  an explanation  of  Section  4 of  the                                                             
proposed committee substitute.                                                                                                  
                                                                                                                                
Ms.  Davidson  explained  that   the  provision  of  Section  4  is                                                             
contingent upon the  approval of this bill by a three-quarter  vote                                                             
of  the  legislature.  She  furthered  that  the  amount  of  money                                                             
appropriated in this section occurs  only upon legislative approval                                                             
to access funds from the CBR.                                                                                                   
                                                                                                                                
Senator Hoffman asked  if only $82 million would be  withdrawn from                                                             
the CBR.                                                                                                                        
                                                                                                                                
Ms.  Davidson  could  not  say  the  exact  amount  that  would  be                                                             
appropriated from the CBR. She noted that the CBR draw would be the                                                             
difference in the total amount appropriated in the FY 05 budget and                                                             
the amount of revenues received.  She stated that if the difference                                                             
is larger than $82 million, the full amount might be withdrawn from                                                             
the CBR, but if the budget gap were smaller, less would be required                                                             
from the CBR.                                                                                                                   
                                                                                                                                
Senator Hoffman reiterated his comments in support of the committee                                                             
substitute to SB 1, but cautioned against spending from the State's                                                             
savings account before having a complete understanding of the total                                                             
financial position.  He stated that spending from the  general fund                                                             
is better policy. He noted that the legislature would be addressing                                                             
the operating budget over the next  few months and recommended that                                                             
decisions  on this matter  be delayed  for a  few days for  further                                                             
review.                                                                                                                         
                                                                                                                                
Senator  Olson remarked  that the  matter in  which this  committee                                                             
substitute is presented is uncommon.  He pointed out that Section 5                                                             
provides  that  authority  to  withdraw  funds  for  the  increased                                                             
education appropriation  from the CBR would be retroactive  to July                                                             
1, 2003. He noted this would affect two budget cycles, although the                                                             
time period to consider this action is limited.                                                                                 
                                                                                                                                
Co-Chair Wilken affirmed.                                                                                                       
                                                                                                                                
Senator Olson found this "highly unusual".                                                                                      
                                                                                                                                
Co-Chair Wilken removed his objection  and the committee substitute                                                             
was ADOPTED.                                                                                                                    
                                                                                                                                
Co-Chair Green  remarked that  the public is  "fully aware"  of the                                                             
dynamics of funding budgets each year. She expressed intent to pass                                                             
a budget  that "fully funds [education]  very early".  She disputed                                                             
Senator  Hoffman's comments  regarding  spending  from the  State's                                                             
savings  account first.  She cited  Ms. Davidson's  testimony  that                                                             
revenue in relation  to expenses is considered first.  She informed                                                             
that currently the amount of revenue  generated is strong and if it                                                             
continues to increase, further discussion of an "ominous draw" from                                                             
the  CBR would  not be  an  issue. She  noted that  economists  and                                                             
revenue forecasts predict continued  revenue increases, which would                                                             
provide adequate  funds to fully  fund the education increase.  She                                                             
spoke to  the need to  "hold down" special  interest requests  that                                                             
would impact  the CBR. She  stressed that  if funds were  withdrawn                                                             
from the CBR they should be for education expenses. She stated this                                                             
is the reason for  the provisions in the committee  substitute. She                                                             
expected  that  school  districts  would be  appreciative  of  this                                                             
legislation  after many years  of requests.  She suggested  that if                                                             
some Committee  members require  additional  time to consider  this                                                             
proposal, they  have not been listening  to the needs  of districts                                                             
for several years.                                                                                                              
                                                                                                                                
Senator B. Stevens supported modification  of SB 1 and he supported                                                             
an appropriation bill that provides for the funding increase for K-                                                             
12 education.  He  remarked that  this concept  "puts forward"  the                                                             
priority  of the twenty-third  legislature,  which is  Kindergarten                                                             
through University of Alaska education. He was willing to commit up                                                             
to  42 percent  of the  budget  "up front"  to education  to  allow                                                             
educators to "know  their budget" and to eliminate  the question of                                                             
whether  adequate  funding  is available  for  the  increased  base                                                             
student  allocation. He  accessed  that adequate  funding would  be                                                             
available in  the State budget to  fund this increase in  FY 05 and                                                             
future  years. He  pointed out  that multiple  funding sources  are                                                             
available  to the legislature  to appropriate.  He reiterated  that                                                             
increased funding  for education is "priority number  one" and once                                                             
addressed would allow consideration of other matters.                                                                           
                                                                                                                                
Senator Hoffman  "wholeheartedly"  agreed, funding education  makes                                                             
good public policy; however, he  stressed that general funds should                                                             
be  used.   He questioned  a  proposal to  utilize  CBR funds  when                                                             
general  funds  were  available.  He suggested  that  if  increased                                                             
education  funding is the  number one priority,  then it should  be                                                             
funded from  the general fund with  only a simply majority  vote of                                                             
the legislature, rather than from the CBR, which requires a three-                                                              
quarter majority vote of the legislature to authorize. He announced                                                             
he would likely vote in favor of  this bill, but against the motion                                                             
relating  to  the  effective  date.  He  indicated  he  would  then                                                             
reconsider  the  proposal  after  the  bill  passed  the  House  of                                                             
Representatives and was before the Senate again.                                                                                
                                                                                                                                
Senator Hoffman recalled  the initial legislation that  established                                                             
the CBR  account, noting he  served as chair  of the House  Finance                                                             
Committee  when it was debated  and was  therefore informed  on the                                                             
subject.  He stressed  the intent  that the  CBR be  utilized as  a                                                             
savings  account   only  after  all  aspects  of  the   budget  are                                                             
considered, including public safety and health care appropriations.                                                             
                                                                                                                                
Senator Olson  also supported increased  funding for education  but                                                             
found  the  proposal  to appropriate  from  CBR  objectionable.  He                                                             
acknowledged  that  the public  might  be  aware of  the  budgetary                                                             
process, but  pointed out that  not permitting public  testimony on                                                             
the matter prevents  the legislature from being fully  aware of the                                                             
situation.                                                                                                                      
                                                                                                                                
Senator  Bunde relayed  discussions he  has had  with school  board                                                             
representatives in which he learned  that districts are required to                                                             
issue "pink slips"  to staff and employees if adequate  funding for                                                             
positions  is in  question. He  stressed the  benefit of  providing                                                             
assurance of this funding as soon as possible.                                                                                  
                                                                                                                                
Senator  Bunde  continued  that   the  oil  and  revenue  forecasts                                                             
predicting  the future of  the CBR have  always been incorrect.  He                                                             
doubted that  an annual budget would  not require funding  from the                                                             
CBR, and  therefore  argued that the  issue of  granting access  to                                                             
withdraw funds from the CBR is irrelevant.                                                                                      
                                                                                                                                
Senator B. Stevens pointed out this legislation does not specify an                                                             
amount that  would be withdrawn from  the CBR, but rather  provides                                                             
for a withdrawal of the amount necessary.                                                                                       
                                                                                                                                
Co-Chair Green  offered a  motion to report  CS SB 35,  23-GS1002\U                                                             
from Committee with individual recommendations.                                                                                 
                                                                                                                                
Senator Hoffman objected  and spoke to the Public Meetings  Act. He                                                             
charged that adequate public notice  was not provided and asked why                                                             
action could not be delayed until the following Monday.                                                                         
                                                                                                                                
Co-Chair  Wilken  noted  the original  version  of  SB 35  was  the                                                             
proposed FY 04 operating budget, and that this committee substitute                                                             
is a  simple appropriation  that does not  require several  days to                                                             
understand. He stressed the importance  to expedite the legislation                                                             
and assured that opportunity would be available to further consider                                                             
the legislation.                                                                                                                
                                                                                                                                
Senator Dyson  commented that  he prefers  a significant amount  of                                                             
time to  consider  matters, but  was satisfied  that the  education                                                             
funding increase  is near the amount the Governor has  proposed for                                                             
education funding and therefore  did not require additional time to                                                             
review  the legislation.  He  added  that he  considers  amendments                                                             
offered on the Senate  floor to be questionable in  their adherence                                                             
to the public notice  provisions of the Public Meetings  Act, given                                                             
that Senators are provided no time to consider the implications. He                                                             
surmised that  the offering of this  committee substitute  is not a                                                             
unique practice.                                                                                                                
                                                                                                                                
                                                                                                                                
SFC 04 # 30, Side B 09:50 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Wilken asked  if Senator Dyson was speaking  to the motion                                                             
to report the bill from Committee.                                                                                              
                                                                                                                                
Senator Dyson replied that he was  speaking to the objection to the                                                             
motion. He  informed that he tried  to attend and participate  in a                                                             
Minority  Caucus meeting that  had been  publicly noticed,  but was                                                             
asked to leave.                                                                                                                 
                                                                                                                                
Co-Chair  Wilken directed the  Members to  cease commenting  on the                                                             
Open Meetings Act.                                                                                                              
                                                                                                                                
Co-Chair Green  told of "endless"  correspondence relaying  "pleas"                                                             
from many  organizations representing  education and children.  She                                                             
remarked that  this legislation represents  the requests  and would                                                             
allow districts to plan their budget year.                                                                                      
                                                                                                                                
Senator Hoffman removed his objection  citing his earlier comments.                                                             
                                                                                                                                
Senator  Olson pointed  out that  Section 3  of the  bill does  not                                                             
specify  the  amount that  would  be  withdrawn  from the  CBR  and                                                             
expressed his apprehension of "signing a blank check".                                                                          
                                                                                                                                
Co-Chair  Wilken commented  this  Committee has  "heard the  school                                                             
bell; it's been rung."  He continued," This legislation  is the way                                                             
that we can answer the call.                                                                                                    
                                                                                                                                
There was no objection and CS SB 35 (FIN) MOVED from Committee.                                                                 
                                                                                                                                
AT EASE 9:53 AM / 9:55 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 257                                                                                                        
     "An  Act  making   capital  appropriations  and   supplemental                                                             
     appropriations;     capitalizing    funds;     making    other                                                             
     appropriations;  making  appropriations  under  art. IX,  sec.                                                             
     17(c), Constitution of the  State of Alaska; and providing for                                                             
     an effective date."                                                                                                        
                                                                                                                                
                                                                                                                                
This was  the third  hearing for  this bill  in the Senate  Finance                                                             
Committee.                                                                                                                      
                                                                                                                                
The  Committee  continued  hearing   overviews  of  capital  budget                                                             
requests.                                                                                                                       
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
     Emergency Medical Services Ambulances and Equipment Statewide-                                                             
     Match for Code Blue Project                                                                                                
     $325,000 ASLC Dividend                                                                                                     
     Reference No.: 33797                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     The request will provide funding  to match federal dollars and                                                             
     other  funding  to purchase  ambulances  and  other  emergency                                                             
     medical equipment needed in rural Alaskan communities.                                                                     
                                                                                                                                
JANET  CLARKE,  Director,  Division  of  Administrative   Services,                                                             
Department of Health and Social Services,                                                                                       
                                                                                                                                
AT EASE 9:56 AM / 9:56 AM                                                                                                       
                                                                                                                                
Ms. Clarke noted that extensive  information about this program has                                                             
been provided to the Committee  in the past. She reminded that this                                                             
funding  would be  utilized to  purchase lifesaving  equipment  for                                                             
volunteers.                                                                                                                     
                                                                                                                                
Senator Dyson asked if the Department  of Transportation and Public                                                             
Facilities owned these vehicles.                                                                                                
                                                                                                                                
Ms. Clarke  answered no. She described  the grant program  in which                                                             
local  governments   or  volunteer  emergency  organizations   have                                                             
ownership of the vehicles.                                                                                                      
                                                                                                                                
     E-Grants                                                                                                                   
     $204,000                                                                                                                   
          $67,300 Federal Receipts                                                                                              
          136,700 G/F Match                                                                                                     
     Reference No.: 39148                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     Phased Project - New                                                                                                       
     Design and build an automated system for the management of all                                                             
     aspects  of  grant  administration,  including  on-line  grant                                                             
     application, award and reporting.                                                                                          
                                                                                                                                
Ms.  Clarke  indicated  she  had  provided  members  with  detailed                                                             
information outlining the intended  use of this appropriation [copy                                                             
on file.]                                                                                                                       
                                                                                                                                
Ms. Clarke informed that the Department  provides over $165 million                                                             
in grants to local non-profit organizations, which is a "very paper                                                             
intensive" process. She told of funding that would be requested for                                                             
FY 06 to complete this project.                                                                                                 
                                                                                                                                
Co-Chair Wilken asked  whether this project is modeled  after other                                                             
states.                                                                                                                         
                                                                                                                                
Ms. Clarke  replied that the Department  surveyed other  states and                                                             
found that  many have  not undertaken these  efforts. She  reported                                                             
that the Department has been reviewing  those that have implemented                                                             
an automated system and that sufficient information is available on                                                             
the procedures and software programs employed.                                                                                  
                                                                                                                                
     Denali  Commission   Grants  for  Non-Primary   Care  Facility                                                             
     Improvements                                                                                                               
     $10,000,000 Federal Receipts                                                                                               
     Reference No.: 39823                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     This  request  will  provide  funding   for  rural  hospitals,                                                             
     behavioral  health facilities  and assisted  living homes  for                                                             
     planning,  design, medical equipment,  and construction.  This                                                             
     request  consists of  federal funds  that are  granted to  the                                                             
     Department  of  Health and  Social  Services from  the  Denali                                                             
     Commission.                                                                                                                
                                                                                                                                
Ms. Clarke informed  that the Denali Commission requested  that the                                                             
Department  administer   approximately  $3.5  million   granted  to                                                             
hospitals across the State, as the Denali Commission was unprepared                                                             
to interact  directly with  hospitals. The  Denali Commission,  she                                                             
stated, therefore  requested to "tap  into" the Department's  grant                                                             
administration infrastructure. She noted that the Denali Commission                                                             
has agreed that a  portion of the $10 million could  be utilized to                                                             
fund  an additional  staff  position  within the  grant  management                                                             
section.                                                                                                                        
                                                                                                                                
Co-Chair Green asked whether utilizing a State agency to administer                                                             
federal grants and  subsequently receive a percentage  of the grant                                                             
funding, is a new  concept in state government. She  asked how this                                                             
program would  evolve, expressing concern  that if the  grants were                                                             
discontinued, whether  the Department would be forced  to eliminate                                                             
the federally funded position.                                                                                                  
                                                                                                                                
Ms. Clarke replied that the funding  source for this staff position                                                             
is categorized as CIP receipts,  and that the intent is to maintain                                                             
a core staff  within the agency  that could be funded  with capital                                                             
funds. She  assured that the  Department avoids over-staffing,  and                                                             
that  in  the  event  of  a  reduction  in  capital  infrastructure                                                             
development, staff  holding certain positions are aware  that their                                                             
positions would be eliminated.                                                                                                  
                                                                                                                                
Co-Chair Green  acknowledged this is  the "factual side",  but that                                                             
reality is  different. She exampled  other pilot projects  in which                                                             
federal  funding was  used to  establish  a program,  but were  not                                                             
provided  to  continue  the  services.   In  these  instances,  she                                                             
contended  that  the  State is  "seen  as  the bad  guy"  when  the                                                             
legislature does not appropriate State funds. She cautioned against                                                             
allowing  this  to  occur with  this  proposal.  She  recognized  a                                                             
division between the State and the Denali Commission, acknowledging                                                             
that the  efforts of the Denali  Commission have received  acclaim,                                                             
but are  not included  in the  State budget.  She wanted to  insure                                                             
against interdependency.                                                                                                        
                                                                                                                                
Co-Chair Wilken furthered that  many items in the State budget rely                                                             
on "outside money" and that programs remain even if those funds are                                                             
no longer  available. He agreed  that if  this proposal is  a pilot                                                             
project, it should  be ensured that federal funding  would continue                                                             
once the program is established.                                                                                                
                                                                                                                                
Senator Olson noted the project description for this item indicates                                                             
the Department  intends to utilize  up to two-percent of  the funds                                                             
for administrative costs associated  with administering the grants.                                                             
He asked  the percentage of  the funds that  would be utilized  for                                                             
hospital and non-primary care facilities.                                                                                       
                                                                                                                                
Ms. Clarke replied that the amount  would be the difference between                                                             
the $10  million  appropriation and  the two  percent withheld  for                                                             
administrative expenses.                                                                                                        
                                                                                                                                
Senator Olson calculated the amount differently.                                                                                
                                                                                                                                
Ms. Clarke  responded that  two percent  is an estimate  negotiated                                                             
with the  Denali Commission  and that  the difference  is likely  a                                                             
"rounding issue".                                                                                                               
                                                                                                                                
     Replacement  of the  Public Health Center  and Pioneers'  Home                                                             
     Telephone Systems                                                                                                          
     $206,400                                                                                                                   
          $21,400 Federal Receipts                                                                                              
          185,000 G/F Match                                                                                                     
     Reference No.: 37964                                                                                                       
     Category: Health/Social Services                                                                                           
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     One-Time Project                                                                                                           
     The phone systems in the Fairbanks, Mat-Su and Interior Health                                                             
     Centers  and the Sitka, Ketchikan  and Juneau Pioneers'  Homes                                                             
     are  over 10  years  old and  in  need of  replacement.  These                                                             
     facilities  are public facilities  that provide vital  medical                                                             
     services  and residential services.  These facilities  need to                                                             
     have reliable  phone service in order to serve  the public and                                                             
     their clients on a daily basis.  This request provides funding                                                             
     to replace the aging phone systems in six facilities.                                                                      
                                                                                                                                
Ms. Clarke  informed  that when  the Department  began planning  to                                                             
implement  telemedicine  systems,   they  were  directed  to  delay                                                             
purchase  of new phone  systems. She emphasized  the dependence  of                                                             
these facilities on phone systems.                                                                                              
                                                                                                                                
     Juneau Family Birth Center Land Purchase                                                                                   
     $150,000 ASLC Dividend                                                                                                     
     Reference No.: 39287                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Juneau Areawide                                                                                                  
     Election District: Juneau Areawide                                                                                         
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     One-Time Project                                                                                                           
     This request  will provide grant funds directly  to the Juneau                                                             
     Family Birth Center to purchase land for construction of a new                                                             
     community family center in Juneau.                                                                                         
                                                                                                                                
Ms. Clarke directed  attention to an aerial photograph  showing the                                                             
land in question [not provided]. She stated it was deemed important                                                             
that this  project have State investment  given other  partners the                                                             
Center  is seeking  and  the design  of  the project.  She  assured                                                             
Senator Dyson  that this facility  does not perform abortions.  She                                                             
also noted that 80  percent of the facility's revenue  is generated                                                             
from billings with the remainder received in grants.                                                                            
                                                                                                                                
Co-Chair Wilken pointed out that this appropriation is necessary to                                                             
secure additional  funding  from the Rasmussen  Foundation  and the                                                             
Murdock Foundation.  He asked whether  this appropriation  is "good                                                             
faith money".                                                                                                                   
                                                                                                                                
Ms. Clarke affirmed.                                                                                                            
                                                                                                                                
     Mental  Health   -  Deferred  Maintenance  and   Accessibility                                                             
     Improvements                                                                                                               
     $400,000  Mental Health  Trust Authority  Authorized  Receipts                                                             
     (MHTAAR)                                                                                                                   
     Reference No.: 33670                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     This program  makes capital  funds available on a  competitive                                                             
     basis  to Mental Health  Trust service  provider agencies  for                                                             
     deferred  maintenance   and  accessibility  improvements   for                                                             
     program facilities.                                                                                                        
                                                                                                                                
Ms. Clarke reminded that this item has been included in the capital                                                             
budget for several years.                                                                                                       
                                                                                                                                
     Mental Health - Essential  Program Equipment Grants to Service                                                             
     Providers                                                                                                                  
     $350,000 MHTAAR                                                                                                            
     Reference No.: 33672                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     The  request will  provide  capital equipment  grants  through                                                             
     competitive  RFP [request for proposals] process  for agencies                                                             
     providing services, activities  and programs for Mental Health                                                             
     Trust beneficiaries. Priority  would be made to fund providers                                                             
     who do not have  the minimum of computer equipment  to be able                                                             
     to  adequately  mange  the new  Alaska  Automated  Information                                                             
     Management System for behavioral health.                                                                                   
                                                                                                                                
Ms. Clarke  noted this item has  also been included in  the capital                                                             
budget for many years. She told  of the requests received by senior                                                             
citizens and disabled for these grants.                                                                                         
                                                                                                                                
     Mental Health - Van/Vehicle and Housing Modifications for                                                                  
     Families or Individuals                                                                                                    
     $300,000 MHTAAR                                                                                                            
     Reference No.: 33671                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     This project  provides housing and vehicle modification  funds                                                             
     for people with special needs.  Vehicle modification funds are                                                             
     for  individual  with developmental  disabilities  or  special                                                             
     needs  for their  families  for  modifications  to make  their                                                             
     vehicles accessible.                                                                                                       
                                                                                                                                
Ms. Clarke stated this special  appropriation is not related to the                                                             
Department   of  Transportation  and   Public  Facilities   special                                                             
transportation coordination program.  Rather, she explained program                                                             
is directed  to undertaking  vehicle modifications  for those  with                                                             
special disabilities  along with housing modifications.  She stated                                                             
these efforts  allow the  recipients to remain  in their homes  and                                                             
subsequently provide  the Department "a lot of bang  for the buck."                                                             
                                                                                                                                
Senator Hoffman requested a list  of communities that have received                                                             
these funds and the specific years of the allocations.                                                                          
                                                                                                                                
Ms. Clarke pointed  out that this budget request shows  anticipated                                                             
State general fund and mental health matching funds of $300,000 for                                                             
the years of FY 05 through FY 10.  However, she noted that the full                                                             
amount has not always been appropriated  in the past. She responded                                                             
to Senator  Olson's  request informing  a bi-annual  list has  been                                                             
maintained, but not an annual list.                                                                                             
                                                                                                                                
     Mental Health - Transitional Housing                                                                                       
     $500,000 MHTAAR                                                                                                            
     Reference No.: 38368                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     The project will fund capital construction costs to build                                                                  
     services   enriched  transitional   housing  for   individuals                                                             
     recovering from substance abuse disorders.                                                                                 
                                                                                                                                
Ms.  Clarke explained  this funding  would  be used  on a  thorough                                                             
competitive   basis   for  nonprofit   organizations   to   provide                                                             
transitional housing.  She informed that some form  of transitional                                                             
housing is necessary for recovery of some patients. She stated that                                                             
the Mental Health Trust Authority supports this use of funds.                                                                   
                                                                                                                                
     Mental  Health - Fairbanks  Detoxification Unit Expansion  and                                                             
     Renovation                                                                                                                 
     $1,450,000 Federal Mental Health Funds                                                                                     
     Reference No.: AMD38366                                                                                                    
     Category: Health/Human Services                                                                                            
     Location: Fairbanks (Fairbanks/Fort Wainwright)                                                                            
     Election District: Fairbanks/Fort Wainwright                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     One-Time Project                                                                                                           
     This   project  will   provide  capital   funding  to   expand                                                             
     detoxification services in  the Fairbanks area to those unable                                                             
     to obtain medical  detoxification services due  to the current                                                             
     limited  capacity.  This  population  is largely  composed  of                                                             
     Mental Health Trust beneficiaries under the Chronic Alcoholism                                                             
     with Psychosis criteria.                                                                                                   
                                                                                                                                
Ms.  Clarke  informed that  the  amendment  to this  project  would                                                             
require   a  title   change  to   the  project   description.   She                                                             
characterized this as a federal project utilizing Denali Commission                                                             
funding.   She  stated   this   proposal  would   utilize   funding                                                             
appropriated the previous year for consideration of a new facility.                                                             
                                                                                                                                
     Mental Health - Treatment-Based  Special Needs Housing Program                                                             
     $400,000                                                                                                                   
        $250,000 Alaska Housing Finance Corporation (AHFC)                                                                      
                     Dividend                                                                                                   
           150,000 MHTAAR                                                                                                       
     Reference No.: 37901                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     The Department of Health and  Social Services program provides                                                             
     funding   to  develop   special   needs   housing  for   Trust                                                             
     beneficiaries  that  cannot be  funded under  AHFC because  of                                                             
     statutory limitations.                                                                                                     
                                                                                                                                
Ms. Clarke  explained that the AHFC  is statutorily unable  to fund                                                             
these  projects directly  because  of treatment  programs  operated                                                             
within the facilities.                                                                                                          
                                                                                                                                
     Mental Health - Consumer Designed and Managed Projects                                                                     
     $250,000 MHTAAR                                                                                                            
     Reference No.: 34042                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     Proposals request funds to plan or carry out consumer-run                                                                  
     facility and community projects.                                                                                           
                                                                                                                                
Ms. Clarke gave as  an example the program operated  at the Polaris                                                             
House  and Ionia,  Inc. in which  participants  learn to  determine                                                             
appropriate  mental   health  treatment.  She  indicated   she  has                                                             
photographs showing  the success of  this program, which  she could                                                             
provide if requested.                                                                                                           
                                                                                                                                
Senator Hoffman  asked the communities  where these facilities  are                                                             
located.                                                                                                                        
                                                                                                                                
Ms.  Clarke responded  Ionia Inc.  is  located in  Kasilof and  the                                                             
Polaris  House is  located in  Juneau  and that  she would  provide                                                             
information on other locations.                                                                                                 
                                                                                                                                
      Mental Health - Medicaid Review and Enhancement Project                                                                   
     $300,000 MHTAAR                                                                                                            
     Reference No.: 39033                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     One-Time Project                                                                                                           
     Medicaid Review and Enhancement Project for all four                                                                       
     beneficiary groups. Approximately 50% of the funding will be                                                               
     limited to the Division of Senior and Disability Services.                                                                 
                                                                                                                                
Ms. Clarke read a portion of the  project description justification                                                             
language as follows.                                                                                                            
                                                                                                                                
     This project will explore, develop, and implement ways to use                                                              
     Medicaid to fund new services or maximize resources for                                                                    
     existing services to underserved beneficiaries.                                                                            
                                                                                                                                
Ms. Clarke emphasized any recommendations would have to comply with                                                             
the cost containment directive from the legislature.                                                                            
                                                                                                                                
     Mental Health - Provider Resource Sharing and Coordination                                                                 
     $150,000 MHTAAR                                                                                                            
     Reference No.: 34039                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     Fund will be used to pilot recommendations at the local or                                                                 
     regional provider level and provide resources to make changes                                                              
     at the State level (i.e. regulatory changes).                                                                              
                                                                                                                                
Ms. Clarke stated the intent of this item is to investigate methods                                                             
to  engineer   and  re-engineer   the  delivery  of  services   and                                                             
coordination between nonprofit organizations.                                                                                   
                                                                                                                                
     Mental Health - Update Issues Affecting Economic Well-Being of                                                             
     Alaska Seniors                                                                                                             
     $30,000 MHTAAR                                                                                                             
     Reference No.: 39029                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     One-Time Project                                                                                                           
     This request will fund a study that will determine the impact                                                              
     of a reduction in senior income and the resulting effect on                                                                
     the safety net to provide senior services.                                                                                 
                                                                                                                                
Ms. Clarke explained this project  would update a report undertaken                                                             
a few years prior.                                                                                                              
                                                                                                                                
University of Alaska                                                                                                          
                                                                                                                                
PAT  PITNEY,  Director  of  Budget  Development  and  Institutional                                                             
Planning, University  of Alaska, testified via teleconference  from                                                             
an offnet  location and referenced  the publication titled  "Fiscal                                                             
Year 2005 Operating  & Capital Budget Requests, Executive  Summary"                                                             
[copy on file], which  she stated represents the Board  of Regents'                                                             
budget proposal.                                                                                                                
                                                                                                                                
It was  determined that  Committee Members  would identify  project                                                             
requests they wished to have overviewed.                                                                                        
                                                                                                                                
Co-Chair  Wilken   asked  if  the  projects  were   listed  in  the                                                             
publication in priority order.                                                                                                  
                                                                                                                                
Ms. Pitney affirmed.                                                                                                            
                                                                                                                                
     Integrated Science Facility                                                                                                
     UAA, Anchorage                                                                                                             
     State Appropriation: $13,600,000                                                                                           
     Total Project Cost (FY 05-10): $46,400,000                                                                                 
                                                                                                                                
Ms.  Pitney  informed that  this  project  is the  Board's  highest                                                             
priority.  She reported  that the  first phase  was funded  through                                                             
bonds  approved by  voters in  the general  election  of two  years                                                             
prior.  She said  the  funds requested  for  the next  phase  would                                                             
provide necessary  classrooms vital  to health and science  courses                                                             
and classroom laboratories.  She noted that current  activities are                                                             
"very constrained".  She  stated that the  estimated total  project                                                             
cost increased  to $70  million with $46.4  million remaining.  She                                                             
noted the original cost estimate was $54.8 million                                                                              
                                                                                                                                
PETE  KELLY,  former   Senator,  and  Director,  State   Relations,                                                             
University  of Alaska,  added that  $8.4 million  has already  been                                                             
appropriated from  the general obligation bonds approved  by voters                                                             
two years prior. He relayed these  funds could be utilized for some                                                             
planning and construction expenses.                                                                                             
                                                                                                                                
Senator  B.  Stevens commented  this  was  the  first he  heard  of                                                             
increase cost of the project, and asked the reason.                                                                             
                                                                                                                                
Ms. Pitney replied that the increased  costs were identified as the                                                             
planning process  progressed. She noted  that the Board  of Regents                                                             
only recently approved the increase.                                                                                            
                                                                                                                                
Senator B.  Stevens pointed out the  increase is almost  30 percent                                                             
and he requested an itemized presentation  of the changes. He asked                                                             
when the original cost estimates were calculated.                                                                               
                                                                                                                                
Co-Chair  Kelly responded  that  design  changes are  necessary  to                                                             
accommodate  a larger  influx of  students  than anticipated  three                                                             
years ago.  He also  noted constructions  costs  in the State  have                                                             
increased substantially.                                                                                                        
                                                                                                                                
Co-Chair Wilken requested a further outline of this project.                                                                    
                                                                                                                                
     Replacement of Research Vessel                                                                                             
     $80,000 Federal Receipts                                                                                                   
     Reference No.: 38921                                                                                                       
     Category: University                                                                                                       
     Location: Juneau Areawide                                                                                                  
     Election District: Juneau Areawide                                                                                         
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     One-Time Project                                                                                                           
     The request is for federal receipt authority for a federal                                                                 
     appropriation to replace the Alpha Helix Research Vessel.                                                                  
                                                                                                                                
Senator Dyson asked the source of the federal funding.                                                                          
                                                                                                                                
Ms.  Pitney  answered the  funds  would  be appropriated  from  the                                                             
National Oceanic  and Atmospheric Administration (NOAA).  She added                                                             
that the  University of Alaska  would become the administrator  and                                                             
manager of  the ship. She told of  the use of the ship by  NOAA and                                                             
the process  in which  the University  serves as  the agent  of the                                                             
ship.                                                                                                                           
                                                                                                                                
Senator Dyson asked  if the University of Alaska becomes  the owner                                                             
of the ship.                                                                                                                    
                                                                                                                                
Ms.  Pitney affirmed  and noted  the University  conducts  research                                                             
utilizing the vessel as well.                                                                                                   
                                                                                                                                
Senator Dyson asked when the ship would be commissioned.                                                                        
                                                                                                                                
Ms. Pitney replied  it would be commissioned three  years from now.                                                             
                                                                                                                                
Senator  Dyson  commented  that the  research  vessel  program  has                                                             
undertaken  "wonderful projects".  He requested specifications  and                                                             
preliminary drawings  and the plans for manning the  new vessel, as                                                             
well as the plans for the current ship once it is replaced. He also                                                             
asked where the new vessel would be home ported.                                                                                
                                                                                                                                
Ms. Pitney replied  the new vessel would be home ported  in Seward,                                                             
noting that the existing  dock must be modified to  accommodate the                                                             
new vessel.                                                                                                                     
                                                                                                                                
Senator Dyson  understood that the  use of federal funds  for State                                                             
vessels often  contains provisions to  allow the vessel to  be used                                                             
during a state of emergency. He asked if this provision is included                                                             
in this project as well.                                                                                                        
                                                                                                                                
Office of the Governor                                                                                                        
                                                                                                                                
                                                                                                                                
     National and International Marketing and Development of Alaska                                                             
     Resources and Products                                                                                                     
     $1,000,000 AHFC Dividend                                                                                                   
     Reference No.: 39284                                                                                                       
     Category: Development                                                                                                      
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2007                                                                            
     One-Time Project                                                                                                           
     Promotions, research and development of Alaska's resources and                                                             
     products including oil and gas.                                                                                            
                                                                                                                                
LINDA PEREZ,  Administrative Director,  Division of  Administrative                                                             
Services, Office  of the Governor, reminded that $1.02  million was                                                             
appropriated  in  1997 for  this purpose,  and  that  a balance  of                                                             
$113,000  remains. She informed  that the  intent is to  "replenish                                                             
this  fund to  support  the  Governor's  priorities to  expand  and                                                             
develop Alaska's resources".                                                                                                    
                                                                                                                                
Co-Chair Wilken asked if a business plan indicating how these funds                                                             
would be spent has been developed.                                                                                              
                                                                                                                                
Ms. Perez replied one has not been developed but offered to provide                                                             
a history of past expenditures.                                                                                                 
                                                                                                                                
Senator  B. Stevens  requested  a breakdown  of  the resources  and                                                             
markets that would be targeted.                                                                                                 
                                                                                                                                
Ms. Perez stated she would provide this information.                                                                            
                                                                                                                                
      Arctic National Wildlife Refuge Oil and Gas Development                                                                   
     $500,000 ASLC Dividend                                                                                                     
     Reference No.: 39283                                                                                                       
     Category: Development                                                                                                      
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2007                                                                            
     On-Going Project                                                                                                           
     Advocate the state's interest in opening the Arctic National                                                               
     Wildlife Refuge to oil and gas development.                                                                                
                                                                                                                                
Ms.  Perez  reported   that  a  fund  intended  to   promote  ANWAR                                                             
development  was  established  in  1993  and  this  request  is  to                                                             
replenish the account, given that efforts are still underway.                                                                   
                                                                                                                                
     Pacific Coastal Salmon Recovery Fund                                                                                       
     $20,868,000 Federal Receipts                                                                                               
     Reference No.: AMD33647                                                                                                    
     Category: Natural Resources                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2008                                                                            
     On-Going Project                                                                                                           
     Federal fiscal year 2004 (FFY04) appropriations legislation                                                                
     contains funding for the Pacific  Coastal Salmon Recovery Fund                                                             
     (PCSRF). Coordination  of individual state funding  is through                                                             
     the respective  Governor's offices. The Alaska  portion of the                                                             
     FFY04  appropriation is  $20.9 million.  Funding comes  to the                                                             
     state  through a  Memorandum  of Understanding  with the  U.S.                                                             
     Department  of Commerce designating  the Alaska Department  of                                                             
     Fish and Game as the program manager.                                                                                      
                                                                                                                                
Ms. Perez reminded that the Department of Fish and Game has                                                                     
testified to this item.                                                                                                         
                                                                                                                                
     Replace the Voter Registration  and Election Management System                                                             
     (VREMS)                                                                                                                    
     $5,450,000 Election Fund                                                                                                   
     Reference No.: 39040                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2007                                                                            
     Phased Project - Underway                                                                                                  
     Replace the Voter Registration  and Election Management System                                                             
     (VREMS) and continue meeting  the mandates of the Help America                                                             
     Vote Act of 2002 (HAVA).                                                                                                   
                                                                                                                                
Co-Chair Wilken asked if this project would utilize the remainder                                                               
of the federal funds appropriated for the implementation of HAVA.                                                               
                                                                                                                                
Ms. Perez answered it would not.                                                                                                
                                                                                                                                
Co-Chair Wilken pointed out expenditures to date has been $14                                                                   
million.                                                                                                                        
                                                                                                                                
     Americans with Disabilities Act Compliance Projects                                                                        
     $100,000 General Funds                                                                                                     
     Reference No.: 6391                                                                                                        
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2006                                                                            
     On-Going Project                                                                                                           
     This  project continues  the removal  of physical barriers  to                                                             
     persons  with disabilities  within  state-owned facilities  as                                                             
     required by  Title II of the Americans with Disabilities  Act,                                                             
     Public Las 101-336. Funding covers the cost of design, project                                                             
     administration,   and  construction.  Aside  from   the  legal                                                             
     requirements,  removal of  physical barriers  will negate  the                                                             
     need for temporary  program modifications which  are currently                                                             
     required  of the facilities'  occupants. Office of  Management                                                             
     and Budget  allocates available  funding to the Department  of                                                             
     Transportation   (DOT)  for  state  facility   ADA  compliance                                                             
     projects  based  upon  DOT's  prioritized  project  list.  The                                                             
     requested FY 2005 funds will  continue work from the statewide                                                             
     priority list.                                                                                                             
                                                                                                                                
Ms. Perez stated this funding has been included in the budget for                                                               
many years.                                                                                                                     
                                                                                                                                
     DELETE: Vessel and Aircraft Maintenance for ADF&G and DPS                                                                  
     $0                                                                                                                         
     Reference No.: AMD39282                                                                                                    
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     On-Going Project                                                                                                           
     Original  vessels and  aircraft deferred  maintenance  funding                                                             
     placeholder  project  of $899,600  is  now split  between  the                                                             
     Departments  of Fish and  Game and  Public Safety and  project                                                             
     funding requested by those departments.                                                                                    
                                                                                                                                
Ms. Perez explained the request was included in the original Office                                                             
of the Governor budget proposal.                                                                                                
                                                                                                                                
Co-Chair Wilken commented this item has been overviewed in the                                                                  
budget requests of other departments.                                                                                           
                                                                                                                                
Department of Public Safety                                                                                                   
                                                                                                                                
     Law Enforcement Equipment Replacement                                                                                      
     $600,000 General Funds                                                                                                     
     Reference No.: 37774                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     On-Going Project                                                                                                           
     Purchase of new and replacement law enforcement equipment used                                                             
     by the  Alaska State  Troopers. The  Division of Alaska  State                                                             
     Troopers  which now  includes  the Alaska  Bureau of  Wildlife                                                             
     Enforcement, rely upon capital improvement project funding for                                                             
     those types of equipment purchases  for day-to-day operations.                                                             
                                                                                                                                
DAN SPENCER, Director, Division of Administrative Services,                                                                     
Department of Public Safety, outlined this request.                                                                             
                                                                                                                                
     Aircraft and Vessel Repair and Maintenance                                                                                 
     $749,600 General Funds                                                                                                     
     Reference No.: AMD6121                                                                                                     
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     On-Going Project                                                                                                           
     The Department  of Public Safety annually requests  repair and                                                             
     maintenance  funds for  the  DPS aircraft  and vessels.  These                                                             
     funds  are   for  the  repair,  replacement  and   maintenance                                                             
     requirements  of this department's aircraft and  vessel fleet.                                                             
     For  example, the  funds will  be used to  rebuild vessel  and                                                             
     aircraft engines and components  when they reach the limits of                                                             
     safe  useful life. Large  marine diesel  engines and  aircraft                                                             
     engines  require expert  vendors to rebuild  them. Many  other                                                             
     components  of  vessels and  aircraft  must be  maintained  or                                                             
     replaced  routinely to  ensure safe  operating conditions  and                                                             
     comply with various safety regulations.                                                                                    
                                                                                                                                
Mr.  Spencer noted  this  request was  originally  included in  the                                                             
Governor's  proposed budgets  for the Office  of the Governor,  the                                                             
Department of Fish and Game and the Department of Public Safety. He                                                             
outlined  this annual  project  for  keeping aircraft  and  vessels                                                             
operational  and  to meet  Federal  Aviation  Administration  (FAA)                                                             
standards.                                                                                                                      
                                                                                                                                
     Public Safety Aircraft, Vessel and Parts Sales                                                                             
     $572,900 General Fund/Program Receipts                                                                                     
     Reference No.: AMD38439                                                                                                    
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2008                                                                            
     One-Time Project                                                                                                           
     Sale  of  four   aircraft  and  surplus  aircraft   parts  and                                                             
     accessories and thirteen vessels  and surplus vessel parts and                                                             
     accessories.                                                                                                               
                                                                                                                                
Mr. Spencer  informed that  this item is  a companion to  Reference                                                             
Number  6121,  Aircraft  and  Vessel  Repair  and  Maintenance.  He                                                             
explained  this item  would  allow  the revenue  from  the sale  of                                                             
aircraft  and  surplus parts  to  fund  maintenance and  repair  of                                                             
retained equipment.                                                                                                             
                                                                                                                                
     Firefighting Breathing Apparatus Replacement                                                                               
     $112,500 General Funds                                                                                                     
     Reference No.: 37785                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     One-Time Project                                                                                                           
     Purchase  45 self  contained  breathing  apparatus (SCBA)  and                                                             
     related  equipment used  to  conduct basic  and advanced  fire                                                             
     training at the three state operated regional training centers                                                             
     in  Anchorage,  Fairbanks  and  Juneau. These  new  units  are                                                             
     necessary to comply with national equipment standards and OSHA                                                             
     regulations.                                                                                                               
                                                                                                                                
Mr. Spencer  reminded  that one-half  of the  requested funds  were                                                             
appropriated for  this project the previous fiscal  year. He stated                                                             
that due  to the  importance of  this equipment  the Department  is                                                             
requesting the remaining funds in this budget.                                                                                  
                                                                                                                                
     Rural Trooper Housing Repairs and Renovation                                                                               
     $147,500 General Funds                                                                                                     
     Reference No.: 38995                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     On-Going Project                                                                                                           
     The Department's Rural Trooper  Housing program provides state                                                             
     owned employee housing in rural Alaska locations where housing                                                             
     is traditionally  scarce. This  project will fund  repairs and                                                             
     renovation of these state-owned units, all of which were built                                                             
     30 years or more ago.                                                                                                      
                                                                                                                                
Mr. Spencer  reported that  15 housing units  are old and  have not                                                             
been maintained.  He warned of the expensive repair  costs in rural                                                             
areas if pipes freeze and break.                                                                                                
                                                                                                                                
Senator  Dyson asked  whether  local craftspeople  and  contractors                                                             
would  be  employed  to  undertake  these  maintenance  and  repair                                                             
projects.                                                                                                                       
                                                                                                                                
Mr.  Spencer was  unsure  the residency  of previous  workers,  but                                                             
assumed local contractors and laborers would be utilized because of                                                             
faster response times.                                                                                                          
                                                                                                                                
Senator Dyson asked if the contracts for these projects are subject                                                             
to labor agreements.                                                                                                            
                                                                                                                                
Mr. Spencer indicated he would research the matter.                                                                             
                                                                                                                                
     Training Academy Handgun Range Repairs                                                                                     
     $45,000 General Funds                                                                                                      
     Reference No.: 39000                                                                                                       
     Category: Public Protection                                                                                                
     Location: Sitka                                                                                                            
     Election District: Sitka/Wrangell/Petersburg                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2005                                                                            
     One-Time Project                                                                                                           
     This project funds needed repairs to the Department of Public                                                              
     Safety Training Academy's handgun range.                                                                                   
                                                                                                                                
Mr. Spencer reported that officers must undergo updated training                                                                
operations. He told of the bullet holes at the facility and the                                                                 
necessity to shoot in certain directs to avoid those holes.                                                                     
                                                                                                                                
                                                                                                                                
SFC 04 # 31, Side A 10:40 AM                                                                                                    
                                                                                                                                
                                                                                                                                
     Statewide Facilities Maintenance                                                                                           
     $37,500 General Funds                                                                                                      
     Reference No.: 38976                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     On-Going Project                                                                                                           
     Facilities Maintenance for DPS occupied, state-owned buildings                                                             
     in 14 communities throughout Alaska.                                                                                       
                                                                                                                                
Mr. Spencer commented on the insignificant amount of this request.                                                              
                                                                                                                                
     Additional Village Public Safety Officers for Rural                                                                        
     Bootlegging Prevention & Enforcement Activities                                                                            
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: ADM39352                                                                                                    
     Category: Law and Justice                                                                                                  
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     Federal funding to hire and equip additional Village Public                                                                
     Safety Officers to engage primarily in bootlegging prevention                                                              
     and enforcement activities.                                                                                                
                                                                                                                                
Mr. Spencer informed that up to ten-percent of this appropriation                                                               
would be retained by the Department for administrative expenses.                                                                
                                                                                                                                
Co-Chair Wilken asked if the expectation is this program would be                                                               
ongoing.                                                                                                                        
                                                                                                                                
Mr. Spencer was unsure.                                                                                                         
                                                                                                                                
Senator Bunde remarked that some federal grants for law enforcement                                                             
activities create  an obligation for the State to continue  funding                                                             
programs  and positions.  He asked if  this is  the case with  this                                                             
grant.                                                                                                                          
                                                                                                                                
Mr. Spencer was not aware that the State would be required to                                                                   
assume financial responsibility in this instance.                                                                               
                                                                                                                                
     Rural Law Enforcement Training and Equipment                                                                               
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: 38479                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2006                                                                            
     One-Time Project                                                                                                           
     The  Department  of  Justice,  Office  of  Community  Oriented                                                             
     Policing  Services,  is expected  to award  the Department  of                                                             
     Public Safety $2,000,000 to train law enforcement personnel in                                                             
     rural locations to increase  their ability to deal with crisis                                                             
     situations and  to purchase equipment for better  responses to                                                             
     emergencies.                                                                                                               
                                                                                                                                
Mr. Spencer noted this funding would allow rural law enforcement to                                                             
be as well equipped as possible.                                                                                                
                                                                                                                                
Co-Chair Wilken asked if these efforts have always been funded with                                                             
federal appropriations.                                                                                                         
                                                                                                                                
Mr. Spencer answered yes.                                                                                                       
                                                                                                                                
     Statewide Illegal Drug and Alcohol Use                                                                                     
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: 38477                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 10/01/2004  06/30/2006                                                                            
     One-Time Project                                                                                                           
     Rural  Alaska continues  to suffer  serious, life  threatening                                                             
     effects  from use of illicit  drugs and alcohol.  This federal                                                             
     grant  will allow the  state to enhance  the efforts  of state                                                             
     troopers, local law enforcement,  and community policing teams                                                             
     to reduce illicit drugs and  alcohol. The use of these illicit                                                             
     substances increases the prevalence  of violent crimes such as                                                             
     homicide, sexual assaults,  robberies, burglaries, and serious                                                             
     domestic violence assaults.                                                                                                
                                                                                                                                
Mr. Spencer stated the State has  received this grant funding for a                                                             
couple of years. He reported that bootlegging continues to be a big                                                             
issue in the Bush. He stated that  the Department of Public Safety,                                                             
in conjunction with the Department  of Law to dedicate a prosecutor                                                             
position as a member of the team addressing these matters.                                                                      
                                                                                                                                
     Marine Fisheries Patrol Improvements                                                                                       
     $1,080,300 Federal Receipts                                                                                                
     Reference No.: 35825                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 10/01/2004  06/30/2005                                                                            
     On-Going Project                                                                                                           
     The  Alaska  State  Legislature  urged the  division  to  seek                                                             
     additional funds  for its patrol efforts in federal  waters of                                                             
     the  North Pacific  Ocean and  Bering Sea.  This project  is a                                                             
     result  of  lengthy  negotiations  with  the  National  Marine                                                             
     Fisheries Service. Federally  regulated marine fisheries occur                                                             
     on a  year-round basis in the  coastal and offshore  waters of                                                             
     the State  of Alaska. Both  the federal and state  governments                                                             
     share an interest  in ensuring these fisheries  are protected.                                                             
                                                                                                                                
Mr. Spencer explained the federal funds are utilized to support the                                                             
costs of  enforcement, noting  that the  Alaska Bureau of  Wildlife                                                             
Enforcement addresses both State and federal matters.                                                                           
                                                                                                                                
     Emergency Vehicle Operation Drivers Training Range                                                                         
     $650,000 Federal Receipts                                                                                                  
     Reference No.: 38998                                                                                                       
     Category: Public Protection                                                                                                
     Location: Sitka                                                                                                            
     Election District: Sitka/Wrangell/Petersburg                                                                               
     Estimated Project Dates: 10/01/2003  06/30/2006                                                                            
     One-Time Project                                                                                                           
     This  project  allows  use of  federal  funds expected  to  be                                                             
     available  for  planning  and  construction  of  an  emergency                                                             
     vehicle operation drivers  training range at the Public Safety                                                             
     Training Academy in Sitka.                                                                                                 
                                                                                                                                
Mr. Spencer expressed the intent is to acquire land adjacent to the                                                             
Academy  and  construct a  driving  course.  He told  of  emergency                                                             
responses and the  higher incidences of crashes due  to the type of                                                             
driving required. He stressed the need to provide the best training                                                             
possible, adding  that emergency  workers in rural communities  are                                                             
unable  to practice  high speed driving.  He also  shared that  the                                                             
Department is  attempting to secure  federal funding to  purchase a                                                             
simulator, but  informed that simulators  are not as effective  for                                                             
training as actual driving.                                                                                                     
                                                                                                                                
AT EASE 10:45 AM / 10:46 AM                                                                                                     
                                                                                                                                
Department of Environmental Conservation                                                                                      
                                                                                                                                
Co-Chair  Wilken referenced  a  report issued  by  the Division  of                                                             
Legislative  Audit and a  spreadsheet outlining  the allocation  of                                                             
funds to the Village Safe Water Program since 1985.                                                                             
                                                                                                                                
MIKE MAHER,  Director, Division  of Information and  Administrative                                                             
Services, Department of Environmental  Conservation, testified that                                                             
the budget  request for FY 05 is  reduced from the current  year by                                                             
approximately  $24 million and also  contains no general  funds. He                                                             
reminded  that the previous  budget was  funded with AHFC  Dividend                                                             
funds, noting that this request also includes ASLC Bond funds.                                                                  
                                                                                                                                
     Village Safe Water Project Administration                                                                                  
     $2,125,900                                                                                                                 
          $ 531,500 AHFC Dividend                                                                                               
          1,594,400 Federal Receipts                                                                                            
     Reference No.: 33820                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This proposed project provides funding for the operating costs                                                             
     of  the Village  Safe  Water Program.  It  contributes to  the                                                             
     agency's  End Result 2 --  Citizens are Protected  from Unsafe                                                             
     Sanitary  Practices. Drinking  water  and sewerage  facilities                                                             
     constructed  with  grant funds  protect  rural residents  from                                                             
     unsafe sanitary practices.                                                                                                 
                                                                                                                                
DAN   EASTON,   Director,   Division  of   Water,   Department   of                                                             
Environmental  Conservation,  reminded  that  this  program  issues                                                             
grants to the State's  smallest communities for water  projects. He                                                             
pointed out  the program  utilizes 70 percent  federal funding  and                                                             
that the amount  is the same as  the previous year. He  stated that                                                             
this funding is included in the operating budget, as it is utilized                                                             
for engineers travel expenses and other operational costs.                                                                      
                                                                                                                                
Senator Dyson asked if the Village  Safe Water projects were listed                                                             
in priority order.                                                                                                              
                                                                                                                                
Mr. Easton answered the projects  are listed in alphabetical order.                                                             
                                                                                                                                
Senator  Dyson  expressed  concerns  about  the  oversight  of  the                                                             
administration  of the  program as  identified in  the Division  of                                                             
Legislative Audit report. He wanted  assurance that the problems do                                                             
not exist or that they are being addressed.                                                                                     
                                                                                                                                
     Statewide Contaminated Sites Cleanup                                                                                       
     $3,000,000 Oil/Haz Fund                                                                                                    
     Reference No.: 33826                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005  06/30/2009                                                                            
     On-Going Project                                                                                                           
     This project funds assessment  and cleanup of highest priority                                                             
     state-owned  sites or  sites  where the  responsible party  is                                                             
     unknown  or  has  refused to  take  appropriate  action.  Work                                                             
     includes assessment,  clean up, monitoring, and  site closure.                                                             
     These projects will contribute directly to the department' end                                                             
     result of protecting the environment by cleaning up historical                                                             
     contaminated sites.                                                                                                        
                                                                                                                                
LARRY  DIETRICK,   Director,  Division  of  Spill   Prevention  and                                                             
Response, Department  of Environmental  Conservation, stated  these                                                             
funds would address 29 priority  sites, 22 of which are State-owned                                                             
facilities.  He stated  that the  remaining seven  sites have  been                                                             
identified  as high priority,  although securing  funding for  this                                                             
effort  from the  responsible  parties has  been  determined to  be                                                             
unfeasible.  He noted  this request  is $2 million  lower than  the                                                             
amount appropriated the previous  year due to a declined balance of                                                             
the Oil and Hazard Fund.                                                                                                        
                                                                                                                                
     Spill Response VHF Communications Upgrade                                                                                  
     $300,000 Oil/Haz Fund                                                                                                      
     Reference No.: 38899                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005  06/30/2010                                                                            
     Phased - New Project                                                                                                       
     This project provides funding  to replace an aging VHF two-way                                                             
     radio  communications  system.  The system  includes  handheld                                                             
     radios, vehicle  radios and repeaters in Prince  William Sound                                                             
     and Cook  Inlet that were installed  in the late 80's  and are                                                             
     nearing the  end of their life expectance. Spare  parts are no                                                             
     longer  available. This project  contributes to Department  of                                                             
     Environmental  Conservation's  end  result of  protecting  the                                                             
     environment by making timely response and cleanup of pollution                                                             
     possible. As  the State's primary response agency  for oil and                                                             
     hazardous  materials  incidents, Department  of  Environmental                                                             
     Conservation  must have  a reliable  communications system  to                                                             
     ensure  responders quickly  deploy  spill resources,  mitigate                                                             
     environmental  damage, and enhance recovery of  damaged areas.                                                             
                                                                                                                                
Mr. Dietrick reported that the current system is so old that                                                                    
replacement parts are not longer available.                                                                                     
                                                                                                                                
     Statewide Hazardous Materials Response                                                                                     
     $300,000 Oil/Haz Fund                                                                                                      
     Reference No.: 38898                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005  06/30/2010                                                                            
     One-Time Project                                                                                                           
     This  project protects  public health  and the environment  by                                                             
     making  timely response  and  cleanup of  hazardous  materials                                                             
     possible.  It  provides  funding   to  sustain  the  Statewide                                                             
     Hazardous    Materials     Response    Team    by;    maintain                                                             
     readiness/response  capabilities for primary teams  located in                                                             
     Anchorage,  Fairbanks,  Valdez and  Southeast Alaska;  provide                                                             
     training classes  and exercises in communities  at risk from a                                                             
     release   of  toxic  chemicals;   conducting  a  major   joint                                                             
     federal/state/local  hazardous materials response  exercise to                                                             
     test capabilities and increase awareness; and funding training                                                             
     and equipment replacement/upgrades.                                                                                        
                                                                                                                                
Mr. Dietrick stated this project would relieve the State from                                                                   
primarily undertaking these efforts, and instead allow                                                                          
participation from federal and local entities.                                                                                  
                                                                                                                                
Mr. Dietrick informed that chemical releases from canneries are a                                                               
high risk. He added that this funding represents the State                                                                      
contribution to maintain the capability.                                                                                        
                                                                                                                                
     Municipal Water, Sewer and Solid Waste Matching Grant Projects                                                             
     $6,742,600                                                                                                                 
          $6,498,100 ASLC Bonds                                                                                                 
             244,500 Federal Receipts                                                                                           
     Reference No.: 33824                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This  proposed   project  provides   funding  for   grants  to                                                             
     communities   to  construct  water,  sewer  and   solid  waste                                                             
     facilities.  It contributes  to the agency's  End Result  2 --                                                             
     Citizens  are   Protected  from  Unsafe  Sanitary   Practices.                                                             
     Drinking  water  and wastewater  facilities  constructed  with                                                             
     grant funds  protect citizens from unsafe sanitary  practices.                                                             
                                                                                                                                
Mr. Easton misspoke and stated  the amount of this appropriation at                                                             
$7.8 million.                                                                                                                   
                                                                                                                                
Mr. Easton stated that unlike the  Village Safe Water Program, this                                                             
item relates to projects undertaken in larger communities. He noted                                                             
this program  requires  up to 15  percent matching  funds from  the                                                             
local government,  depending upon the population of  the community.                                                             
He also  pointed  out this funding  request  is approximately  $2.7                                                             
million less than the current fiscal year appropriation.                                                                        
                                                                                                                                
Co-Chair  Wilken pointed  out that  although no  general funds  are                                                             
requested  for  capital  projects  for FY  05,  general  funds  are                                                             
anticipated for this and other items in future years.                                                                           
                                                                                                                                
Senator B. Stevens  asked the amount of general funds  utilized for                                                             
this project  in previous years. He  also requested a  breakdown of                                                             
funding to be requested in future  years for projects undertaken in                                                             
the prior four years.                                                                                                           
                                                                                                                                
Mr. Easton replied he would gather that information.                                                                            
                                                                                                                                
     Village Safe Water Feasibility Studies                                                                                     
     $1,222,500                                                                                                                 
          $305,800 AHFC Bonds                                                                                                   
           916,700 Federal Receipts                                                                                             
     Reference No.: 33821                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This  proposed project  provides funding  for grants to  small                                                             
     communities to plan water and sewer facilities. It contributes                                                             
     to the  agency's End Result 2  -- Citizens are Protected  from                                                             
     Unsafe  Sanitary   Practices.  Drinking  water   and  sewerage                                                             
     facilities   constructed  with   grant  funds  protect   rural                                                             
     residents from unsafe sanitary practices.                                                                                  
                                                                                                                                
Mr.  Easton   noted  this   funding  request   is  a  decrease   of                                                             
approximately   $1.4   million  from   the  current   fiscal   year                                                             
appropriation.  He explained this  item relates to the  engineering                                                             
studies that "form the basis" of the Village Safe Water Program and                                                             
are used to match communities with appropriate projects.                                                                        
                                                                                                                                
Senator Bunde asked if local matching funds are required to receive                                                             
these grants.                                                                                                                   
                                                                                                                                
Mr. Easton  replied that no local  matching funds are  required for                                                             
the Village Safe Water Program.                                                                                                 
                                                                                                                                
     Village Safe Water Projects                                                                                                
     $78,046,800                                                                                                                
          $19,512,500 AHFC Bonds                                                                                                
           58,534,300 Federal Receipts                                                                                          
     Reference No.: 33822                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004  06/30/2009                                                                            
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This  proposed project  provides funding  for grants to  small                                                             
     communities   to  design   and  construct   water  and   sewer                                                             
     facilities.  It contributes  to the agency's  End Result  2 --                                                             
     Citizens  are   Protected  from  Unsafe  Sanitary   Practices.                                                             
     Drinking water and sewerage  facilities constructed with grant                                                             
     funds protect rural residents  from unsafe sanitary practices.                                                             
                                                                                                                                
Mr. Easton informed this funding  request is approximately the same                                                             
as the  appropriation  for the current  fiscal year.  He noted  the                                                             
individual projects are detailed  in 46 budget allocation requests.                                                             
                                                                                                                                
Co-Chair Wilken referenced the aforementioned spreadsheet detailing                                                             
the funding allocated to various projects. He asked if the database                                                             
includes previous projects and planned projects.                                                                                
                                                                                                                                
Mr. Easton affirmed and noted previous funding amounts are included                                                             
in the database.                                                                                                                
                                                                                                                                
Co-Chair  Wilken  acknowledged  the  efforts  of  the  Division  to                                                             
organize and detail the projects.                                                                                               
                                                                                                                                
Co-Chair  Wilken  recalled  concerns expressed  by  Co-Chair  Green                                                             
resulting in the  Division of Legislative Audit report.  He relayed                                                             
that Co-Chair  Green requested the  budget subcommittee  review the                                                             
audit and identify  ways to "fix?some past transgressions  and past                                                             
practices" that  were perhaps "inappropriate  or well managed".  He                                                             
surmised  Co-Chair Green's  intent is  that this  review effort  be                                                             
ongoing in future years.                                                                                                        
                                                                                                                                
Mr. Easton commented that the Village  Safe Water Program "is not a                                                             
stranger to audits." Most audits of the program, he noted, focus on                                                             
accounting of  funds and whether  funds are properly  appropriated,                                                             
and that the findings have indicated  no discrepancies. He disputed                                                             
much of the  findings in the current  audit, opining that  auditors                                                             
have trouble understanding  construction and the confusion  results                                                             
in recommendations  the  Division does  not always  agree with.  He                                                             
noted that Senator Dyson has requested  a more detailed response to                                                             
the audit.                                                                                                                      
                                                                                                                                
Senator Dyson reiterated that the Department disagrees with much of                                                             
the findings of the audit.                                                                                                      
                                                                                                                                
Mr. Maher reported  that since audit was issued the  Department has                                                             
considered  more  involvement  of the  Division  of  Administrative                                                             
Services as well as establishing  a procurement position within the                                                             
Division  to  oversee   appropriations.  He  qualified   that  such                                                             
oversight  is not  always  appropriate.  He assured  that  internal                                                             
methods to address the issue are under consideration.                                                                           
                                                                                                                                
Senator B. Stevens noted that as a member of the Legislative Budget                                                             
and Audit  Committee he  is satisfied with  the Village Safe  Water                                                             
Program.  He understood  that abuses  occurred in  the past and  he                                                             
wanted assurances that they would not reoccur. He also stressed the                                                             
importance that these issues are  addressed, cautioning that abuses                                                             
jeopardize the entire program.                                                                                                  
                                                                                                                                
Senator Bunde  furthered that the  abuses referenced by  Senator B.                                                             
Stevens could not be considered acceptable construction procedures.                                                             
He contended  that the discrepancies  in the audit are  not because                                                             
auditors do not understand construction practices.                                                                              
                                                                                                                                
Mr. Maher shared  that the Department directed the  Human Resources                                                             
Manager to  review the audit and  identify any ethical  violations.                                                             
The review,  according to  Mr. Maher found  no such violations.  He                                                             
assured  the Department  is  taking the  information  in the  audit                                                             
seriously.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated that the  audit would not be debated at this                                                             
time; rather, the budget subcommittee would review the matter under                                                             
the direction of Senator Dyson.                                                                                                 
                                                                                                                                
Senator  Dyson commented  he did not  "want to  raise the level  of                                                             
expectations." He  explained that the budget subcommittee  would be                                                             
unable to fully investigate the matter without significant                                                                      
resources.                                                                                                                      
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 11:07 AM                                                                          

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