Legislature(2005 - 2006)SENATE FINANCE 532
02/14/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB60 | |
| SB98 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 60 | TELECONFERENCED | |
| *+ | SB 97 | TELECONFERENCED | |
| *+ | SB 98 | TELECONFERENCED | |
MINUTES
SENATE FINANCE COMMITTEE
February 14, 2005
9:04 a.m.
CALL TO ORDER
Co-Chair Green convened the meeting at approximately 9:04:12 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice-Chair
Senator Bert Stedman
Senator Donny Olson
Senator Fred Dyson
Also Attending: SHANNON STRAUBE, Staff to Senator Ben Stevens; PAT
DAVIDSON, Legislative Auditor, Legislative Audit Division,
Legislative Affairs Agency; CHERYL FRASCA, Director, Office of
Management and Budget, Office of the Governor; ERIC SWANSON,
Director, Division of Administrative Services, Department of
Administration; AL CLOUGH, Deputy Commissioner, Department of
Commerce, Community and Economic Development; JOELLEN HANRAHAN,
Director, Division of Administrative Services, Department of
Commerce, Community and Economic Development; PORTIA PARKER, Deputy
Commissioner, Department of Corrections; CHARLINE GRIFFIN, Acting
Director, Division of Administrative Services, Department of
Corrections; KAREN REHFELD, Deputy Commissioner, Department of
Education and Early Development; EDDY JEANS, Manager, Education
Supports Services, Department of Education and Early Development;
KRISTIN RYAN, Director, Division of Environmental Health,
Department of Environmental Conservation; NANCY SLAGLE, Director,
Division of Administrative Services, Department of Transportation
and Public Facilities; JOHN CRAMER, Director, Administrative
Services Division, Department of Military and Veterans Affairs;
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities, Department of Transportation and Public Facilities
Attending via Teleconference: From Offnet Sites: JOHN KATZ,
Director of State/Federal Relations and Special Counsel, Washington
District of Columbia Office, Office of the Governor; From
Anchorage: DAN SEAMOUNT, Commissioner/Chair, Alaska Oil & Gas
Conservation Commission, Department of Administration; JACK HARTZ,
P.E., Senior Reservoir Engineer, Alaska Oil & Gas Conservation
Commission, Department of Administration; KATE GIARD, Commissioner,
Regulatory Commission of Alaska (RCA), Department of Commerce,
Community and Economic Development
SUMMARY INFORMATION
SB 60-EXTEND SUICIDE PREVENTION COUNCIL
The Committee heard from the sponsor and the Division of
Legislative Audit. The bill reported from Committee.
SB 98-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK
The Committee heard fast track supplemental request information
from the Office of the Governor; the Department of Administration;
the Department of Commerce, Community and Economic Development; the
Department of Corrections; the Department of Education and Early
Development; the Department of Environmental Conservation; the
Department of Transportation and Public Facilities; and the
Department of Military and Veterans Affairs. The bill was held in
Committee.
SB 97-SUPPLEMENTAL APPROPRIATIONS/CBR
This bill was scheduled but not heard.
SENATE BILL NO. 60
"An Act extending the termination date of the Statewide
Suicide Prevention Council; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Green informed that the intent is to move this bill from
Committee today. Therefore, she urged supporters of the bill to
submit their comments in writing or via other forms of
communication as substantial testimony might impede the bill's
forward momentum. She noted that Fiscal Note #1, which specified
zero funding requirements for FY 2006 through FY 2011, has been
replaced by a revised Department of Health and Social Services
fiscal note, dated February 11, 2005, which "properly" depicts zero
funding for FY 06 and $119,000 per year for FY 2007 through FY
2011. The Council would be funded in the Governor's budget in FY
06.
SHANNON STRAUBE, Staff to Senator Ben Stevens, the sponsor of the
bill, explained that this legislative would extend the termination
date of the Suicide Prevention Council, which was established in
2001, to June 30, 2009. The Division of Legislative Audit's audit
regarding the Council, Audit Control Number 06-20037-05 dated
November 15, 2004 [copy on file], recommended that the Council be
extended. During a Senate Health, Education and Social Services
(Senate H&SS) committee hearing on this bill, the development of
"measurable performance indicators" was discussed. That
recommendation was forwarded to the Council. A letter [copy on
file] to Senator Fred Dyson, Chair of the Senate H&SS committee,
from Council Chair, Jeanine Sparks, dated Feb. 3, 2005 indicates
that the Council would be addressing the recommendation during the
quarterly meeting scheduled for February 22 and 23, 2005.
Co-Chair Green understood that the Audit had been thoroughly
discussed by the Senate H&SS Committee. The development of
performance measures is important and should be furthered.
PAT DAVIDSON, Legislative Auditor, Legislative Audit Division,
Legislative Affairs Agency stated that she would be available to
answer questions pertaining to the findings and recommendations of
the Audit.
Co-Chair Green asked whether Ms. Davidson agreed that the Senate
H&SS Audit discussion was thorough.
Ms. Davidson affirmed.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and new fiscal note.
There being no objection, SB 60 was REPORTED from Committee with a
revised zero fiscal note, dated February 11, 2005 from the
Department of Health and Social Services.
AT EASE 9:10:43 AM / 9:13:04 AM
Co-Chair Wilken chaired the remainder of the meeting.
SENATE BILL NO. 98
"An Act making supplemental appropriations, capital
appropriations, other appropriations, and reappropriations;
amending appropriations; making appropriations to capitalize
funds; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken noted that public testimony would not be
entertained today, as the intent is to hear Department
presentations regarding the Fast Track Supplemental bill. It was
noted that some of the Fast Track Supplemental items were self-
explanatory and would not, therefore, be discussed. [NOTE: Co-Chair
Wilken inadvertently referenced the Fast Track Supplemental bill as
SB 97 rather than SB 98.]
CHERYL FRASCA, Director, Office of Management and Budget, Office of
the Governor budget informed that the FY 2006 budget package
presented by Governor Frank Murkowski on December 15, 2004,
included a $125 million increment consisting of $85 million in FY
2005 supplemental requests and $40 million in Governor's
Initiatives. This increment was "identified as a placeholder for
additional spending out of current year revenues." There is a
substantiated reason for the inclusion of each supplemental
request, and while the total supplemental budget exceeds the $125
million increment by $17 million, the Administration sought out
alternative savings mechanisms such things as changes in formula
driven programs to offset the additional expenses.
Ms. Frasca stated that in addition to traditional supplemental
requests relating to unanticipated events, $40 million of
Governor's Initiatives for "non-traditional" items is being
requested: a $28 million sum lump amount for additional work
relating to the gas pipeline, a significant portion of which would
address Department of Law pipeline related expenses; $6.5 million
to support "the Governor's commitment" to assist small cities with
elevated fuel costs via the Small City Energy Assistance Program;
and another $5.5 million to provide for Department of Health and
Social Services programs the Governor would like to implement prior
to FY 2006. In regards to the Small City Energy Assistance Program,
it was noted that while escalating market prices for oil increase
revenues to the State, "the downside is that it also increases
utility costs throughout the State."
Ms. Frasca stated that $37 million of the approximate $97 million
in general funds being requested would address traditional
supplemental needs relating to fire suppression efforts. Cost
containment measures being developed by the Department of Health
and Social Services to address increased costs associated with the
Medicaid program have not been completely finalized, and therefore
$36 million of the Department's total $39 million supplemental
request is for general funds. Seven million dollars of the $11
million supplemental request of the Alaska Marine Highway System
(AMHS) would address higher fuel costs. Several million dollars
would support Department of Transportation and Public Facilities
highway and aviation expenses; and $6.5 million would address such
things as legal expenses and the Department of Corrections'
contractual obligations relating to out-of-State prison costs.
Co-Chair Wilken noted that the requests being presented are
outlined in the eight-page "Summary of Major FY 05 Funding
Requests" handout [copy on file], prepared by the Office of
Management and Budget on February 7, 2005.
Office of the Governor
Item: 33
Section: 8
RDU: Arctic National Wildlife Refuge
Supplemental Need: Funds for support of national efforts to
open ANWR for oil and gas exploration and development
$500,000 General Funds
JOHN KATZ, Director of State/Federal Relations and Special Counsel,
Washington, District of Columbia Office, Office of the Governor,
testified via teleconference from an offnet site and expressed that
this is a good time to further Arctic National Wildlife Refuge
(ANWR) legislation at the Congressional level because it could be
addressed during their Budget Reconciliation Process deliberations.
These deliberations are "cleaner and simpler than the normal
legislative process and it is not subject to a veto in the Senate."
However, passage of a Budget Resolution this year could be
questionable due to the potential failure of Congress to agree on
issues unrelated to ANWR. Congress has not passed a Budget
Reconciliation Bill in two of the last three years. Nonetheless,
the fact that the Congressional leadership is supportive of
including ANWR legislation in the Budget Reconciliation Bill should
be recognized as a major step forward. Deliberations on this bill
are "protracted" and could extend through August.
Mr. Katz noted that "the second major vehicle for dealing with
ANWR" at the Congressional level is through comprehensive energy
legislation. This issue also has some obstacles in its path,
unrelated to ANWR. He spoke in support of Arctic Power and stressed
that either it or something similar to it would be necessary to
further ANWR as "the government does not provide in public policy
advocacy; they are the one entity in the process that's supposed to
think about ANWR 24/7." Arctic Power "has made major strides
forward" in the last few weeks in that there has been improvement
in its coordination with the Alaska Congressional delegation and
the Governor's Office; experienced personnel have joined the staff;
and improved public policy campaigns have been developed.
Nonetheless, discussions are continuing between the State and
Arctic Power regarding the State's position that some additional
changes must be made. In addition to this $500,000 Supplemental
Budget request, separate FY 06 legislation is being proposed that
could provide an additional $1.1 million or $1.3 million to Arctic
Power. The most prudent manner through which to view the funding
for Arctic Power would be to divide it into two components. The
first phase would focus on efforts regarding the inclusion of ANWR
legislation in the Budget Resolution process. Were the Legislature
to appropriate $500,000, it would be combined with other fund
sources consisting of prior State allocations and private funding
that could amount to approximately $225 million. The initial phase
of this effort could cost $750,000. Also occurring during this time
would be efforts regarding the energy bill, which would be
addressed via the normal Congressional process. "A much better idea
of how ANWR and the energy legislation" would be faring in the
109th Congress would be available about the time the Alaska
Legislature adjoins in May. At that time, Arctic Power would have
"a better handle" on the outcome of its efforts and how to proceed
in the future. The second phase would consist of "whatever Arctic
Power requires to complete the efforts in the aftermath of Budget
Reconciliation."
Co-Chair Wilken asked regarding the projected timeline of the
Budget Reconciliation process.
Mr. Katz responded that a timeframe for Budget Reconciliation is
difficult to estimate. Were it to operate "in pristine form" a
Budget Resolution could be presented to the President in late April
or May. However, past history depicts that this process could
extend to Congress's August recess or beyond. It is also possible
that a Budget bill might not transpire this year. Its status would
be clearer in late April or May.
Department of Administration
Item: 7
Section: 1
RDU: Non-Public Building Fund Facilities
Supplemental Need: Increased costs for heating fuel and other
utilities for Non-Public Building Fund buildings
$110,000 General Fund
ERIC SWANSON, Director, Division of Administrative Services,
Department of Administration stated that this request would provide
funding to address increased fuel and utilities costs. Facilities
provided for by this Fund include the Governor's Mansion, the Third
Floor of the Capitol Building, the Dimond Courthouse, the Archives
and Records Center, the State Museum and Annex, and the Subport
Building, all of which are located in Juneau. Increased snow
removal expenses also impacted the budget.
Item: 24
Section: 7(a)
RDU: Capital
Supplemental Need: AOGCC costs for gas pipeline reservoir
studies and depletion plan evaluations
$1,200,000 General Funds
Mr. Swanson reviewed the supplemental need summary.
DAN SEAMOUNT, Commissioner/Chair, Alaska Oil & Gas Conservation
Commission (AOGCC), Department of Administration, testified via
teleconference from Anchorage and noted that AOGCC has provided a
handout [copy on file], dated February 14, 2005, that describes the
duties of AOGCC, the areas of study that are being furthered, the
reason for General Fund rather than regulatory cost charge fund
support, and the reason for this request being included in the Fast
Track supplemental request. The primary issue is the conducting of
"a study to evaluate the effects of major gas sales taking
reservoir energy off of the Prudhoe Bay reservoir which could
result in hundreds of millions of barrels of oil loss if it is not
conducted in the correct manner." The purpose of the study would be
to determine methods "through which to mitigate the costs." Because
studies of this magnitude require approximately three years to
complete, AOGCC desires to advance its responsibilities in order to
avoid being a "bottleneck" in a project "that is so important to
the State."
Co-Chair Wilken, noting that the project is slated to begin on
March 1, 2005 and terminate in 2010, asked why this request could
not be included as part of the FY 2006 normal budgeting process.
Mr. Seamount responded that AOGCC must complete the required
studies it could approve any gas line operators' plans. Once plans
are approved, equipment and other essential operational expenses
could be ordered. These elements must be addressed years prior to a
gas pipeline becoming operational.
Co-Chair Wilken continued to puzzle over the reason that this
funding request could not be delayed until the start of the FY 06
fiscal year on July 1, 2005.
Mr. Seamount responded that in order to begin "the planning process
on the project," AOGCC must have its budget developed prior to a
March 3, 2005 hearing.
Co-Chair Green asked whether any reservoir study expenses have been
incurred to date.
Mr. Seamount expressed that "no direct costs" have been incurred.
Co-Chair Green asked whether the studies would be performed in
house or by contract.
Mr. Seamount specified that the studies would be contracted out "to
experts in these types of reservoir evaluations … these are very
specific kinds of studies."
Co-Chair Green asked whether a Request for Proposals (RFP) for
these studies has been developed at this time.
Mr. Seamount answered in the negative.
Co-Chair Green joined Co-Chair Wilken in questioning the reason
that this request could not be addressed in the regular FY 06
budgeting process.
Co-Chair Wilken asked the reason for this being a General Fund
request.
Ms. Frasca explained that all gas pipeline related expenses,
regardless of their timeframes, were included in the Supplemental
bill. Each Department could identify which project's funding could
be delayed. In other words, "there is some discretion".
Co-Chair Wilken asked the reason that the AOGCC request seeks
General Funding.
M. Frasca expressed that because AOGCC is funded by production
taxes and these studies are not production related it was deemed
inappropriate to utilize that traditional funding source.
Senator Olson questioned what might occur where the request denied.
Ms. Frasca deferred to Mr. Seamount.
Mr. Seamount reiterated that, "AOGCC does not want to be a
bottleneck in this very important project." Expediency in
undertaking the studies to determine what the reasonable gas
production rate would increase the likelihood that the forward
movement of the project would not be impeded.
Co-Chair Wilken asked regarding the aforementioned AOGCC handout.
JACK HARTZ, P.E., Senior Reservoir Engineer, Alaska Oil & Gas
Conservation Commission, Department of Administration, testified
via teleconference from Anchorage and confirmed that the AOGCC
handout was provided to Committee members.
Item: 43
Section: 13(a)-(c)
RDU: Salary & Benefits Adj.
Supplemental Need: FY 05 costs for the General Government Unit
collective bargaining agreement.
$2,571,500 General Funds
$1,138,200 Federal Funds
$1,856,500 Other Funds
Total Funds: $5,566,200
Mr. Swanson stated that due to the fact that the General Government
Unit (GGU) FY 05 contract had not been ratified until after the
Legislature had adjourned last year, the monetary terms for FY 05
are included in this supplemental request. Theses funds would
provide for GGU health insurance cost increases.
Co-Chair Green asked for confirmation that the funds were specific
to GGU health insurance expenses.
Mr. Swanson affirmed.
Department of Commerce
Item: 8
Section: 2(a)
RDU: Community Advocacy
Supplemental Need: Small city energy assistance program
$6,450,000 General Funds
AL CLOUGH, Deputy Commissioner, Department of Commerce, Community
and Economic Development stated that this request reflects the
Governor's commitment to provide relief funds to offset small
communities' high fuel costs. Approval of the request would allow
communities to receive shipments of fuel in the Spring when rivers
have high water levels as opposed to later in the year when levels
are low and harder to navigate. This request also corresponds with
efforts being undertaken by the Governor's Energy Council to evolve
the energy position of small communities.
Senator Stedman noted that while the title of the request states
that this is a Small City Energy Impact Assistance Program, the
last line of the description in the SB 98 detailed summary book
[copy on file] states that, "the cities may use the monies for any
public purpose for which the city has authority to spend." This
language insinuates that the money would be provided "with no
strings attached." Were that the case, "the title does not match"
the usage of the money.
Mr. Clough could not speak to the concern, as he was not the
drafter of the language. He allowed that this would provide the
communities with flexibility, especially were a community to have
such things as federal Internal Revenue Service (IRS) problems that
would make it difficult to route energy assistance programs through
"without having them attached by the IRS."
Co-Chair Wilken asked whether altering the language to specify that
this funding should be "a reimbursement for fuel costs … would
conform with the original intent rather than just a reinstitution
of revenue sharing."
Mr. Clough voiced no objection.
Co-Chair Wilken stated therefore that this would be further
discussed.
Senator Stedman agreed that specific language would bring the
funding "back on point." The current language is "conflicting."
Co-Chair Wilken agreed and stated that the funding should not be
approved unless it specifically provided for fuel assistance.
Senator Olson asked the number of communities that have taken
advantage of this program.
Mr. Clough replied that this "formula driven appropriation" would
be available to 125 communities with small communities each
receiving a $25,000 payment and larger communities each receiving
$75,000. As this is a new program, no funds have, of yet, been
appropriated or distributed.
Co-Chair Wilken understood that a maximum of 125 communities would
be subject to the legislation. He asked that a list of the affected
communities be provided.
Mr. Clough stated that the names of the communities and other
associated specifics are included in Section 2(a) beginning on line
eight, page one of the bill.
Co-Chair Wilken asked whether this program would continue in FY
2007.
Mr. Clough responded that this would be a policy decision rather
than a Department decision. The Department's role in this endeavor
is to assist in making "systemic changes" that would, in addition
to lowering the cost of delivered fuel to the communities, assist
in improving the overall energy costs to these communities.
Successes in this regard have been achieved through such mechanisms
as the establishment of fuel cooperatives, bulk buying, and bulk
management of fuel. Such efforts would, over the long run, provide
both "community and economic enhancements throughout the Bush." The
savings generated from these endeavors "could allow the program to
essentially support itself." The Department views this as "a one-
time opportunity to make positive changes."
Co-Chair Wilken noted that, for the past year, any freight
transiting through the Port of Anchorage and onto the road system
has been assessed a ten-percent fuel surcharge. Therefore, the
people of the District he represents have been "paying extra to
live in their chosen community." Therefore, he voiced concerned
that this program is community specific when fuel expenses have
impacted numerous others. He does not support this program, which
he viewed as an arbitrary "selective grant" program "with no
basis." This "very divisive, very disturbing" request is his "least
favorite" request in the Supplemental Bill.
Co-Chair Wilken asked the reason that the funding for this program
is not being presented in the FY 06 budget proposal.
Mr. Clough responded that funding this program, which was first
presented in the Fall by Governor Murkowski, via the Supplemental
approach would allow fuel to be transported in the Spring to take
advantage of high water levels. Delaying the funding to FY 06 would
eliminate that opportunity, as smaller shipments in the Fall would
result. Larger savings would be incurred by Spring transits.
Senator Bunde commented that the detailed summary booklet denotes
that this request would assist small cities that "have taken on the
financial responsibilities of a city yet lack the population or
commercial sector to generate revenue through increasing local fees
or taxes." He asked regarding a [unspecified] report that Co-Chair
Wilken had, at a separate time, developed regarding the earned
income of residents in unorganized areas of the State.
Co-Chair Wilken recalled that 18,000 individuals in unorganized
Alaska had earned a total of $505 million in FY 04.
Co-Chair Green furthered earlier questions regarding the FY 07
funding of this program; specifically whether its funding would be
"rolled" into the base funding for FY 06 with the intent of
continuing the program in FY 07.
Co-Chair Green observed that Ms. Frasca was "shaking her head, no."
Senator Stedman asked, for procedural clarity, whether line item
language changes such as specifying that this funding be utilized
specifically "for fuel" is allowable.
Co-Chair Wilken asked the Administration to provide the Committee
"with the procedure by which we would restrict this to fuel
purchases only."
Senator Olson commented that, due to the high price of fuel, a
"large portion of the small communities" he represents "are
desperate for some of these funds." He asked whether any studies
have been conducted regarding the cost to the State were this
funding not forthcoming.
Mr. Clough responded that while no studies have been conducted in
this regard, the issue has been discussed. "The basic premise is
certainly if small communities do not have adequate fuel; public
facilities are at risk." The end result is not good. Acquiring the
data for such a study would be a challenge as a lot of the
information is antidotal. However, the situation is of concern and
therefore, this request is supported by the Department.
Co-Chair Wilken noted that these questions would be further
addressed.
Item: 10
Section: 2(c)
RDU: Regulatory Commission of Alaska
Supplemental Need: Legal service costs of $190.0 provided by
the Department of Law were inadvertently omitted from the
Regulatory Commission of Alaska's FY 05 budget. $75.0 for
outside counsel costs and $258.0 to implement the Regulatory
Commission of Alaska's improvement initiative to meet its
mission more efficiently and effectively are also included.
$523,000 RCA Rcpts
JOELLEN HANRAHAN, Director, Division of Administrative Services,
Department of Commerce, Community and Economic Development
commented that, in addition to providing funding to support legal
expenses that were inadvertently omitted from the Regulatory
commission of Alaska (RCA) FY 05 budget, this request would provide
funds "for the TAPS appeal on RCA orders" as well as to provide the
funding for an Improvement Initiative.
Co-Chair Wilken asked whether this request could be addressed in
the FY 06 budget.
Ms. Hanrahan expressed that of the total request, $190,000 was
inadvertently unfunded in FY 05 and the initial phases of the
Improvement Initiative should be undertaken now.
KATE GIARD, Commissioner/Chair, Regulatory Commission of Alaska
(RCA), Department of Commerce, Community and Economic Development,
testified via teleconference from Anchorage and shared that when
she was elected to her position as Chair of the Commission on July
1, 2004, unprecedented discussions were undertaken with utility and
pipeline companies "to address the issues that seem to come before
the Legislature" each time the Commission is due to terminate.
Approval of this funding request would provide the Commission,
which is due to terminate in 2007, two years in which to re-
evaluate, "identify and fix issues" gleamed from the discussions to
include: timeliness, accountability, public access, and fair and
equitable rates. Continued funding of this Improvement Initiative,
which started in 2004, would continue the "significant momentum"
towards the goal of addressing concerns before the review of the
next RCA extension in 2007. She reviewed some of the issues that
are currently being addressed.
Department of Corrections
Item: 12
Section: 3(a)
RDU: Office of the Commissioner
Supplemental Need: Support for enhanced correctional officer
and probation officer recruiting efforts in urban and rural
Alaska. Workplace Alaska alone is not bringing enough
applicants. The department will purchase TV and radio spots,
and advertisements in smaller publications in locations such
as Seward, Bethel, Nome, Kenai, Eagle River and Mat-SU.
$50,000 General Funds
PORTIA PARKER, Deputy Commissioner, Department of Corrections,
explained that this funding would be required to fund an
advertising campaign to recruit new correction and probation
officers, as the Department is currently experiencing difficulty
filling these positions. This is the first time the Department has
had to conduct such a campaign.
Senator Dyson questioned the reason for these difficulties, as he
understood that these positions' employee contracts are some of
"the most attractive" in the State.
Ms. Parker replied that one issue is that people "are unaware of
the career opportunities" in the Department of Corrections. The
advertising campaign would assist in publicizing that component. In
addition to working with the Department of Labor and Workforce
Development and the University of Alaska, the Department has
conducted, among other efforts, career and job fairs. Nonetheless,
it is "still having a difficult time" with receiving a sufficient
number of applicants who meet the required qualifications.
Senator Dyson asked the annual salary range of a five-year
correctional officer.
CHARLINE GRIFFIN, Acting Director, Division of Administrative
Services, Department of Corrections responded that, with benefits,
the salary would be approximately $70,000. She would verify this
information.
Co-Chair Wilken asked the Department to investigate whether this
funding request could be addressed with annual lapsed funds.
Ms. Griffin responded that "no large" Results Delivery Unit (RDU)
lapsed funds are projected this year. A large amount of the
Department's money has been expended on overtime due to vacant
positions, leave, and worker's compensation situations.
Senator Olson asked about recruitment efforts targeting local hire,
specifically in Rural Alaska.
Ms. Porter responded that consistent and strong local hire efforts
have been conducted as exampled by the hiring of seven correctional
officers in Nome during the recruitment campaign that was conducted
during the Iditarod Sled Dog Race last year. Local hire efforts are
also conducted in Bethel, which has an 80-percent local hire rate.
The continuance of Rural Alaska local hire recruitment efforts
would be enhanced by this advertising campaign.
Item: 13
Section: 3(b)
RDU: Administrative Services
Supplemental Need: The department is seeking an e-procurement
application to lower purchasing prices and improve
efficiencies within the buying process for commodities,
equipment, food, and services.
$225,000 General Funds
Ms. Griffin noted that the Department developed its FY 05 budget
based upon the implementation of "a spend management e-procurement
type system" that has not, of yet, come to fruition. An RFP has
been developed with the goal of advancing a system akin to either a
spend management program or a Procurement Pilot Project in FY 05
that would produce savings and efficiencies in FY 06.
Co-Chair Wilken asked the reason the Department decided to advance
its own program rather than to wait for the State's e-commerce
pilot program to be developed.
Ms. Griffin responded that both options are being explored, with
the possibility that the Department "might end up waiting for
that." However, due to the fact that the FY 05 budget was based on
the assumption that the Department would be utilizing some type of
e-procurement system, funds are unavailable to support any system.
Co-Chair Wilken stated that this request would be further analyzed.
Item: 14
Section: 3(c)
RDU: Out-of-State Contractual
Supplemental Need: The new contract with the Arizona facility
started November 1, 2004. With the increased bed cost from
$53.99 to $57.15 and the projected population at the facility,
the department needs additional funds to pay the contractor
for housing Alaskan offenders.
$2,292,900 General Funds
Ms. Porter stated that this request is included in the supplemental
bill because negotiations regarding out-of-state correctional
facility housing had not concluded until after the FY 05 budget was
finalized.
Item: 15
Section: 3(d)
RDU: Parole Board
Supplemental Need: Funding needed to conduct discretion and
mandatory parole hearings through the fiscal year. The
anticipated savings from conducting hearings telephonically or
using video conferencing equipment were insufficient.
$65,000 General Funds
Ms. Griffin shared that $75,000 in Travel Funds had been removed
from the Parole Board's FY 05 funding due to the understanding that
savings would be incurred by conducting hearings telephonically or
via video-conferencing. However, this has not proved feasible, as
these systems "do not have the capacity" to support the number of
participants who need to or want to attend those hearings. These
include such individuals as the family of the offender, the Board,
attorneys, and the victims. This money would support the Parole
Board's operations through the end of the fiscal year. Absent this
money, hearings would not be heard and potentially an additional 20
prisoners could be held in custody rather than possibly being
released on discretionary parole. This could incur an additional
$195,000 in expenses to the Department.
Co-Chair Green asked whether the Parole Board must address a parole
request within a certain period of time. In addition, she
questioned the impact that short funding of the Board might have.
Ms. Griffin responded that short funding would negatively affect
the Board. The Board must conduct Mandatory Parole hearings within
120 days of the individual's being remanded. Approximately 425
Mandatory Parole hearings and 175 Discretionary hearings are
conducted annually.
Co-Chair Wilken revisited Item 13 and asked whether any of the
$225,000 request for the e-commerce system has been expended to
date.
Ms. Portia responded that no expenditures have been made to date.
Department of Education and Early Development
Item: 17
Section: 4(a)
RDU: School Finance and Facilities
Supplemental Need: Legal and expert services due to the Noon
v. State funding lawsuit; extended lapse date to June 30, 2006
$230,000 General Funds
KAREN REHFELD, Deputy Commissioner, Department of Education and
Early Development corrected the information in the request in that
Moore V. State rather than Noon V. State is the focus of the
request. "This lawsuit was filed last Fall challenging the State's
public school funding formula." The State has "retained a national
firm of experts" to assist State attorneys in their preparations.
This request has an extended lapse date into FY 06, as it is
anticipated that the case would "take some time."
Co-Chair Wilken asked whether additional funding might be required
in FY 06.
Ms. Rehfeld responded that an amendment from the Governor would be
presented in this regard.
Senator Stedman noted that $800,000 in total costs is anticipated.
EDDY JEANS, Manager, Education Support Services, Department of
Education and Early Development, replied that $800,000 is "the
preliminary estimate." It might increase as the case advances.
Co-Chair Wilken understood that this request pertains to a
disability rather than an adequacy lawsuit.
Ms. Rehfeld clarified that the Noon V. State lawsuit, which is
incorrectly referenced in Item 17, is a disability lawsuit. The
correct lawsuit being addressed in Item 17 is the Moore V. State
lawsuit.
Co-Chair Wilken understood therefore that the Moore V. State
lawsuit is an adequacy study lawsuit.
Ms. Rehfeld concurred.
Co-Chair Green asked for confirmation that this is a General Fund
request.
Ms. Rehfeld affirmed.
Co-Chair Green opined that this "sizable amount that could have
gone toward increasing" the student allocation funding formula.
Co-Chair Wilken agreed.
Item: 18
Section: 4(b)
RDU: Mt. Edgecumbe Boarding School
Supplemental Need: Residential operating costs related to
expanded student population
$800,000 General Funds
Ms. Rehfeld stated that this expense relates to the Department's
Mt. Edgecumbe Boarding School project. This expense is associated
with the residential housing program "including food services,
dormitory services, janitorial services and supplies" as an
additional 30 students are enrolled in the School this year. A
corresponding increase for an additional 30 students is requested
in the FY 06 budget.
Co-Chair Green asked whether this funding had been requested in the
FY 05 budget.
Ms. Rehfeld acknowledged that this is the second time this request
had been submitted. The Committee had discussed, but had not
approved, a similar request in the budgetary process last year.
Co-Chair Green asked whether "anything happened" that would
indicate that the Committee might have changed its position on this
issue.
Ms. Rehfeld was uncertain as to whether the Committee's "minds have
been changed." The School is serving additional students and does
have the additional expenses this year.
Co-Chair Green asked for confirmation that an increase is also
anticipated for the next school year.
Ms. Rehfeld affirmed. She noted that the Legislature had approved
capital funds for an addition to a classroom building the previous
year. In addition, funding has been approved to renovate an older
building to serve as a 60-bed dormitory. Discussions have
transpired regarding whether or not funding for an additional 30
students should have been included in the FY 05 budget. Currently,
students are being housed on the third floor of the Sitka Pioneer
Home, which had been vacant. This arrangement "has worked out very
well" with both the students and the Pioneer Home residents. The
School recently experienced its highest student retention rate with
only nine students choosing to leave the School by Christmas time.
"There is a lot of excitement and a lot of very positive things
happening at Mt. Edgecumbe right now. So the discussion at the
table, I think, is about the timing, but we do have the additional
costs this year."
Co-Chair Green commented that it would be difficult to approve an
$800,000 increase for this School this year and next year when no
other State high school would be receiving a similar funding
"boost". She noted that money provided to the school as determined
by the number of students attending it should have assisted in
covering the operational cost of the facility. She voiced
disappointment at receiving this supplemental budget request.
Co-Chair Wilken suggested that a timeline of the decisions that
have been made in regards to the School over the last 18 months be
developed, as it would assist in understanding how the situation
reached this point. He voiced that he was surprised to see this
request.
Senator Stedman assumed that the population increase at this School
is due to its caliber of performance. He asked whether the
corresponding decrease in the number of students at other schools
would assist in offsetting the costs.
Ms. Rehfeld responded that the School's students come from 110,
primarily Rural Alaska, communities across the State. While there
would be an offsetting decrease in those schools' educational
student funding program, the expenses included in this request are
for residential program costs, which are not provided for in that
funding component. She stressed that this funding request is for
residential expenses rather than for educational expenses.
Senator Stedman stated that further information would be gleamed
once the afore-requested timeline was developed and discussed. The
expenses and offsetting educational components could be addressed.
He voiced support for the request.
Senator Olson also spoke in support of the request. Continuing, he
asked how not funding this request would affect those 30 additional
students.
Ms. Rehfeld responded that, absent this supplemental request
funding, the Department's personal services budget in its entirety
would be utilized to pay the residential and teaching staff
expenses. The students could continue attending the School.
Senator Olson understood that, absent this funding, the School's
enrollment would decrease by 30 students the next school year.
Ms. Rehfeld responded that were the Legislature to disallow both
this request and the FY 06 operating funding request relating to
serving additional students, and, in light of the fact that School
Capital expansion projects had been approved, the program should be
re-evaluated.
Senator Olson, noting that he was "a product of the boarding school
program," stated that in addition to the challenge of having
increased enrollment, efforts must be taken to allow those
students, especially students from Rural Alaska, "to survive in
college."
Senator Stedman noted that housing students on the third floor of
the Sitka Pioneer Home should be considered as an offsetting factor
relating to the finances of the Pioneer Home.
Ms. Rehfeld characterized the relationship between the School and
the Home as "a very good relationship." The utilities and capital
improvements associated with preparing the facility to house
students has worked out well. Both the students and the Home
residents are happy with the arrangement.
Co-Chair Wilken concluded that more work would be conducted
regarding Item 18.
Item: 19
Section: 4(c)
RDU: Museum Operations
Supplemental Need: Funding shortfall due to unanticipated
decline in program receipts and increased internal
chargebacks.
$100,000 General Funds
Ms. Rehfeld stated that this request would address the personal
costs of operating Alaska State Museums. One attributing factor to
this request was a $48,000 decrease in program receipts, which are
a major personal costs funding source, as the beautiful sunny
summer experienced in Southeast Alaska negatively impacted the
number of museum visitors. Other factors include internal charge-
backs for such things as administrative services, Information
Technology (IT) support, and Board expenses. Internal charge-backs
are becoming more common as Departments have been downsized and
general fund support has decreased. There is also a $30,000
"maximum vacancy" component problem. Replacement funding options
are limited and offsetting measures could include closing the
museum for periods of time. This however, would further reduce
program receipt revenues. She voiced optimism regarding FY 06
funding support for the museum and the State library as depicted in
the Governor's proposed budget. However, funding options are
limited in FY 05.
Co-Chair Green asked whether the internal chargebacks being
referenced are within the Department of Education and Early
Development or involve other departments.
Ms. Rehfeld clarified that the internal chargebacks are, for the
most part, within the Department of Education and Early
Development. There is a small chargeback component associated with
the Department of Administration. She noted that relatively little
general funds are available within the Department's executive
administration or administrative services divisions.
Ms. Rehfeld characterized the Department as "a lean organization"
as, during the past few years, eleven positions have been
eliminated in its central administrative office, the Commissioner's
office, and its Information Technology services components.
Resorting to internal chargebacks was necessary in order to cover
Department costs. Being responsible for chargebacks prohibited the
Museum from utilizing funds to absorb this personal services
shortfall. She reiterated that with both the Legislature and
Governor's support, the FY 06 budget would be adequately funded.
Co-Chair Wilken noted, "that as the Department has become less
broad with childcare and other issues going to the Department of
Labor and Health and Social Services, the indirect costs are being
spread across those components that remain." In this regard, the
Legislature asked that efforts be made to unburden the remaining
components from such things as administrative expenses. These
efforts are coming to fruition in the FY 06 budget. The question as
to whether the administrative expenses are appropriate is another
discussion.
Senator Stedman asked whether the decline in museum visitors was
specific to the Juneau museum.
Ms. Rehfeld replied that the funding request was not broken down
between the Juneau and Sitka museums. She surmised that the
decrease in program receipts was primarily attributable to the
Juneau museum as Juneau typically receives a larger visitor
population than Sitka; however, she allowed that the weather was as
nice in Sitka as it was in Juneau.
Item: 43
Section: 13(a)-(c)
RDU: Salary & Benefits Adj.
Supplemental Need: FY 05 costs for the General Government Unit
collective bargaining agreement.
$2,571,500 General Funds
$1,138,200 Federal Funds
$1,856,500 Other Funds
Total Funds: $5,566,200
Ms. Rehfeld noted that a small portion of the Item 43 GGU
component, which was discussed by the Department of Administration,
pertained to the Department of Education and Early Development's
GGU employees.
Department of Environmental Conservation
Item: 20
Section: 5(a)
RDU: Capital
Supplemental Need: Due to safety issues relating to emerging
bioterrorism threats and animal diseases, changes in design
were necessary to meet original intent and provide a safe and
secure laboratory facility. This amendment provides additional
funding to cover those design changes and complete
construction of the new Environmental Health Laboratory
$355,000 General Funds
$500,000 Federal Unrestricted Rcpts
$855,000 Total Funds
Item: 21
Section: 5(b)
RDU: Capital
Supplemental Need: Agriculture economic disaster match of
$500.0 of federal unrestricted receipts in DNR for non-
existent federal funds is reappropriated from sec. 24(n), ch.
159, SLA 2004, page 81, to Department of Environmental
Conservation for the Seafood and Food Safety Lab Replacement
project.
($500,000) Federal Unrestricted Rcpts
KRISTIN RYAN, Director, Division of Environmental Health,
Department of Environmental Conservation, stated that these
requests, which would complete the construction of the Department's
Environmental Health laboratory that is due to open in the Fall,
are the result of changes required to respond to today's bio-
terrorism climate. These efforts were not a consideration when the
building was originally designed. The design changes include
providing the State's veterinarian the ability to conduct autopsies
on animals for dangerous diseases in that he necropsy tables used
for these autopsies had to be relocated to a bio-safety level 3
area of the facility. In addition, the location of the shipping and
receiving area was changed in order to accommodate a "safety hood"
containment system. These improvements would serve to protect
employees, customers, and the community from exposure to dangerous
contaminates.
Senator Olson asked how necropsies have historically been
conducted.
Ms. Ryan responded that animals were previously autopsied at the
State's virology laboratory in Fairbanks. The construction of this
facility would provide the State "the capacity" to process such
things more expeditiously in Anchorage.
Senator Olson understood that a new laboratory was also slated for
Fairbanks. Therefore, he asked whether this might result in a
redundancy of biology and technical staff.
Ms. Ryan responded that some redundancy might occur, however, the
intention is that animals would be autopsied at the Anchorage
environmental health facility and the virology testing would be
confirmed in the Fairbanks virology laboratory. Other benefits of
this system would include developing base sampling to which other
subsequent testing could be compared.
AT EASE 10:29:00 AM / 10:29:03 AM
Department of Transportation and Public Facilities
Item: 22
Section: 6(a)
RDU: Marine Hwy Stabilization
Supplemental Need: Fuel cost increases
$6,813,200 General Funds
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, stated that
this appropriation would provide funds to address the Alaska Marine
Highway System's FY 05 increased fuel expenses. The System would
experience appropriately "a 90-percent increase" in fuel prices
over its FY 05 budget. The System typically consumes 9.5 to 11
million gallons of fuel each year; this request is based upon a
usage projection of 10.2 million gallons. A graph titled "AMHS
Weekly OPIS Fuel Prices"[copy on file] that depicts fuel prices
from FY 99 through FY 05 was distributed.
Co-Chair Wilken understood that rather than lapsing at the end of
the fiscal year, the expectation is that this money would be
exhausted by June 30, 2005.
Ms. Slagle voiced that this amount should sufficiently provide for
FY 05 fuel expenses.
Co-Chair Wilken understood therefore that there are outstanding FY
05 fuel expenses.
Ms. Slagle expressed that the System receives weekly invoices from
fuel suppliers.
Co-Chair Wilken asked whether the System "hedges" its fuel.
Ms. Slagle explained that there is a Statewide vessel fuel contract
in effect that applies to fuel utilized by all State vessels
including the Department of Transportation and Public Facilities
and the Department of Fish and Game. Fuel price is dependent on
OPIS prices, which change on a weekly basis. In addition, delivery
charges are applied based on location.
Senator Bunde voiced the understanding that some Marine Highway
System employees attest that, "due to the light construction" of
the new fast ferries they would not operate "as fast as they were
intended." To that point, he asked how this would affect future
fuel consumption.
Ms. Slagle stated that the Department's fuel consumption
projections are based upon the experience to date for the M/V
Fairweather. While no change is anticipated regarding the speed at
which the vessel would operate, the recent rough sea damage it
experienced is being investigated by the Department and the ship
builder to determine whether "management changes" might be
required. Were the operating speed of the vessel reduced, the
amount of fuel required would lower rather than increase.
Senator Stedman stressed "how vital" the ferry system is to
Southeast Alaska and its "economic base", and that he supported
efforts that would make the System "more effective, and efficient
and user-friendly going forward." However, he questioned the reason
that fuel consumption projections would continue at the historical
nine to eleven million gallon level considering the addition of one
"fast ferry that consumes substantially more fuel" with another one
anticipated to be in operation shortly. In addition to the amount
of fuel that the fast ferry would consume being underestimated, he
understood that its associated labor expenses were also
underestimated.
Ms. Slagle replied that since the second fast ferry, the M/V
Chenega, would not be operational until approximately the end of FY
05 its expenses "would not be taken into account as much." She
acknowledged that the System's annual fuel consumption has varied
and assured that such things as weather conditions and the larger
amount of fuel required by the M/V Fairweather have been factored
into the System's projections. While the M/V Fairweather requires
"less personal services than" the mainliners, it does require more
fuel. The Department is "conservative in its approach" as to how
the M/V Fairweather would be operating when placed back in service.
Senator Stedman asked the reason that the fast ferries were
furthered since, in the analysis of the entire ferry system, "fuel
is an issue of non impact" in that with or absent the fast ferries,
fuel consumption is unaffected.
Ms. Slagle asked for further clarification of the question.
Senator Stedman expressed that with the arrival of the fast ferry
he would "have expected to see totally higher fuel consumption,
regardless of price for the Marine Highway System above and beyond
the historical use"
Ms. Slagle clarified that the System is using more fuel with eleven
million gallons of fuel being projected for FY 05. Prior to the M/V
Fairweather being operational, annual fuel consumption ranged
between nine and ten million gallons. She apologized for
"misdirecting" the Committee.
Senator Olson asked whether the increase in fuel price has impacted
ferry customers' fees.
Item: 44
Section: 14(a)
RDU: Marine Vessel Operations
Supplemental Need: Fuel cost increases and other increasing
operating costs.
$12,000,000 AMHS Fund
Ms. Slagle stated that the $12 million increase identified in Item
14(a) reflects the System's fuel and operating cost increases. In
addition to a ten-percent fuel surcharge being added to passenger,
car deck, and staterooms fares, a seven-percent labor rate increase
went into effect in the Summer of 2005. These fee increases are
projected to generate $1.7 million for the System. The System is
attempting to increase its revenues to offset higher fuel prices.
Senator Olson questioned the reason for implementing "only" a ten-
percent surcharge, as the $1.7 million it might generate would not
offset the System's $12 million increase in expenses.
Ms. Slagle responded that it is difficult "to determine the
elasticity of demand" in that how much could fares increase without
the System loosing further money due to declining ridership.
Co-Chair Wilken noted that the funding for this item is the Marine
Highway Fund. Therefore he asked whether the System is requesting a
total of $18.8 million: $12 million from the Marine Highway Fund
and $6.8 million from the General Fund. He opined that the AMHS
Fund is essentially General Fund money.
Ms. Slagle clarified that the $12 million Marine Highway Fund
request "is the authorization to expend from the Fund itself."
Approval of the $6.8 million general fund request would serve to
deposit that money "directly into the Fund." The Marine Highway
Fund consists of general fund money as well as revenues generated
by the System. Since the Fund had a carry forward amount going into
FY 05, "the amount of subsidization" being requested in 6(a) for
the Fund is less than the authority to spend as specified in 14(a).
Co-Chair Wilken calculated therefore that the carry forward amount
must be approximately five million dollars.
Ms. Slagle concurred.
Co-Chair Wilken stated that the Department of Transportation and
Public Facilities' supplemental request presentation would continue
following the Department of Military and Veterans Affairs'
presentation.
Department of Military and Veterans Affairs
Item: 23
Section: 6(b)
RDU: Disaster Relief Fund
Supplemental Need: Base capitalization of fund $1,000.0; 2004
Bering Strait Sea Storm $4,054.4; Interior Earthquake
shortfall $259.3; and Kaktovik Winter Storm $2,363.5
$7,677,200 general fund
JOHN CRAMER, Director, Administrative Services Division, Department
of Military and Veterans Affairs, read the Supplemental Need
language. The Interior Earthquake shortfall is the result of an
earthquake that occurred a few years prior and to which the
Department successfully argued "to secure federal funding for some
airports." The Kaktovik Winter Storm disaster occurred recently.
Co-Chair Wilken asked regarding the one million dollar
capitalization portion of the request.
Mr. Cramer responded that it is prudent to have funds in reserve in
order to address a disaster as it arises.
Co-Chair Wilken asked regarding the Kaktovik disaster; specifically
as to whether the source of what caused the town's generator to
malfunction has been identified.
Mr. Cramer responded that this investigation is continuing.
Co-Chair Wilken hoped that, when finalized, a report would be
provided.
Item: 41
Section: 11
RDU: National Guard Military Headquarters
Supplemental Need: National Guard Audit Disallowance - Federal
auditors have disallowed state expenditures in FFY05 for a
total of $937,234. This request will cover October 2004 to
June 2005. An amendment will be offered in the FY 06 budget to
cover these expenditures for the remainder of FFY05 and FFY06.
The department estimates they will run out of general funds by
the end of March.
$446,000 General Funds
Mr. Cramer read the Supplemental Need. The Department would be
absorbing a large portion of the total shortfall through such means
as not filling vacant positions.
Co-Chair Wilken asked for an example of the things the federal
audit disallowed.
Mr. Cramer responded that a large portion "of the fallout" resulted
from the disallowance of expenses associated with some "people who
provide supervision to the workers that are performing functions at
the bases." This supervisory scenario has been routine since 1994.
The Department has been working with the auditors for the past two
years to "develop methodology that would be more appropriate."
Co-Chair Wilken asked Senator Dyson, the Committee's Chair of the
Department of Military and Veterans Affairs subcommittee, to
further address this issue and provide a report to the Committee.
Senator Dyson concurred.
Senator Olson asked whether the Department had anticipated that
some of the supervisory expenses might be disallowed.
Mr. Cramer responded "no." The Department has been working with the
auditors to address this situation. The audit review began in
September 2004. In addition, some of the federal money that has
been disallowed is the result of the federal fiscal year differing
from the State's, which required expenses "to be extrapolated out
for the State's fiscal year." The federal fiscal year is October
first through September thirtieth.
Senator Olson asked whether significantly smaller supplemental
requests would be anticipated in the future due to the negotiations
being undertaken.
Mr. Cramer affirmed.
Department of Transportation and Public Facilities
Item: 44
Section: 14(a)
RDU: Marine Vessel Operations
Supplemental Need: Fuel cost increases and other increasing
operating costs.
$12,000.0 AMHS Fund
Ms. Slagle stated that this request is again the authorization to
expend from the AMHS Fund. In addition to providing funds to cover
expenses resulting from higher fuel prices, the authorization
provides for "unanticipated costs" resulting from such things as
the M/V LeConte grounding which required the Department "to
contract out services so that we could continue to maintain the
level of service that has been provided previously." Other expenses
would include approximately $500,000 in expenses associated with
crew training for the new fast ferry, the M/V Chenega in the spring
2005. She noted that federal funding provided for the training
expenses associated with the M/V Fairweather. Risk management
premium expenses and overall expenses of the M/V LeConte and the
M/V Fairweather have also increased.
Co-Chair Green asked for further information regarding the AMHS
Fund, as like Co-Chair Wilken, she viewed it as being essentially
general funds rather than "a pot of money sitting there waiting to
be spent for this." Discussion regarding the Fund should "reflect"
this.
Co-Chair Wilken understood that at one time, there was a pot of
money as $100,000,000 had been deposited into the AMHS Fund to
support the System. That "has been whittled away" to zero.
Ms. Slagle shared that the AMHS Fund had been established in 1991
and "seeded" with $41 million "with the intent of providing
stability to the AMHS." That amount equated to approximately the
revenues the System generated at the time. "The revenues came in
and the subsidy went into the Marine Highway Fund; therefore we
could have some stability as to the expenditure of those funds over
the year, and not have to come back for large amounts of
supplementals in the meantime." That balance has been eroded over
the years due to such things as "increased costs, loss of revenues,
a variety of things." The Fund is "to the point now of just going
from year to year almost."
Senator Stedman asked the impact of the M/V LeConte grounding on
the risk management insurance premium.
Ms. Slagle informed that the risk management premium increases
reflected in this request result from the Department's desire to
hold the AMHS accountable for such expenses. Currently the
Department's Catastrophic Reserve Fund is being utilized to pay for
basic insurance premium coverage as well as the insurance premium
increases. However, with "the reduction of lapsed monies and the
availability of funds going into the Catastrophic Reserve Fund"
diminishing, the desire is to curtail such expenditures from that
Fund and have the AMHS be more accountable for them. She voiced
being unsure as to how the M/V LeConte grounding incident would
affect premiums. This might be reflected in the next responses to
the Request for Proposal (RFP) for risk management insurance
coverage contract. Lloyds of London coordinates the insurance
coverage for AMHS vessels.
Senator Bunde opined that, as specified in the detailed information
regarding this request, applying the term "overhaul" to the work
being conducted on the M/V Fairweather, is inappropriate for that
insinuates that the vessel has been in operation for a while and is
being upgraded. Therefore, he asked whether this term in regards to
that new vessel would apply to the repair work being conducted to
address the rough sea damage it experienced.
Ms. Slagle responded that it would apply to such things as the
vessel's engine replacement and cowling repairs. It would also
address the "fix-its:" oil changes and other things that occur in
the new vessel, similar to such things experienced when one
purchases a new vehicle.
Item: 45
Section: 14(b)
RDU: Central Region Highways and Aviation
Supplemental Need: King Salmon airport - prior year invoices
outstanding for air traffic control costs.
$44,500 General Funds
Senator Olson asked regarding the Control Tower at the King Salmon
airport.
Ms. Slagle stated that an agreement was recently reached with the
Federal Aviation Administration (FAA) to continue the air traffic
control tower at King Salmon, as the FAA had planned to discontinue
that service due to the airport's limited number of flights. The
State 's position is that this action "would have caused a great
deal of problems." In addition to the agreement with the FAA, the
Department is paying for a contractor to provide services.
Senator Olson, a pilot, noted that he has flown in and out of King
Salmon and Naknek numerous times. He asked the type of problems
that not having a control tower there would create.
Ms. Slagle understood that difficulties have been experienced
during the fishing season in getting fish to market. Further
information would be provided.
Item: 46
Section: 14(c)
RDU: Program Development
Supplemental Need: Legal costs for defense of SB 260, which
changed the membership makeup of the policy board for
metropolitan planning organizations.
$85,000 General Funds
Senator Bunde asked whether this item might be "premature" as he
understood that this legal challenge is pending.
Ms. Slagle replied that the lawsuit concerning SB 260 has been
filed, and the State is in the process of delivering a reply brief.
This would be the legal cost as estimated by the Department of Law,
to address this issue between now and the end of FY 05. The law
enacted by SB 260 would become effective July 1, 2005.
Item: 48
Section: 15(a)(1)
RDU: Capital
Supplemental Need: Kotzebue: Obstruction Removal and Safety
Area
$5,300.0 Federal Funds
Item: 49
Section: 154(a)(2)
RDU: Capital
Supplemental Need: Tenakee Springs: Seaplane Float
Rehabilitation.
$550.0 Federal Funds
Item: 50
Section: 15(b)
RDU: Capital
Supplemental Need: Surface Transportation Program increase pf
$44,150.0 in federal funds as allocated below:
Item: 51
Section: 15(b)(1)
RDU: Capital
Supplemental Need: Alaska Marine Highways: Coffman Cove
Terminal
$1,600,000 Federal Funds
Item: 52
Section: 15(b)(2)
RDU: Capital
Supplemental Need: Alaska Marine Highways: Mitkof Island;
South Mitkof Island Terminal
$3,500,000 Federal Funds
Item: 53
Section: 15(b)(3)
RDU: Capital
Supplemental Need: Dalton Highway: Milepost 37 to 49
Reconstruction - Hess Creek to Yukon River
$1,400,000 Federal Funds
Item: 54
Section: 15(b)(4)
RDU: Capital
Supplemental Need: Glenn Highway: Milepost 41 - Dogwood
intersection
$1,400,000 Federal Funds
Item: 55
Section: 15(b)(5)
RDU: Capital
Supplemental Need: Haines: Ferry Terminal through town to Old
Haines Highway
$13,000,000 Federal Funds
Item: 56
Section: 15(b)(6)
RDU: Capital
Supplemental Need: Haines Highway: Revetment Reinforcement
$2,400,000 Federal Funds
Item: 57
Section: 15(b)(7)
RDU: Capital
Supplemental Need: Ketchikan: Tongass Highway - Third Avenue
to Tunnel Resurfacing
$5,000,000 Federal Funds
Item: 58
Section: 15(b)(8)
RDU: Capital
Supplemental Need: Parks Highway: Milepost 72 to 83
Reconstruction - Willow Creek to Kashwitna River
Reconstruction
$1,250,000 Federal Funds
Item: 59
Section: 15(b)(9)
RDU: Capital
Supplemental Need: Parks Highway: Milepost 204 - Summit
Railroad Overcrossing
$4,900,000 Federal Funds
Item: 60
Section: 15(b)(10)
RDU: Capital
Supplemental Need: Petersburg: Mitkof Highway - Ferry Terminal
South Resurfacing
$1,600,000 Federal Funds
Item: 61
Section: 15(b)(11)
RDU: Capital
Supplemental Need: Richardson Highway: Milepost 341 - Eielson
Access Ramps
$500,000 Federal Funds
Co-Chair Wilken stated that the requests described in Items 48
through 61 would amount to approximately "$50 million in re-
allocated spending."
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities, Department of Transportation and Public Facilities,
informed the Committee that the Department is processing projects
faster and therefore, the authorization to expend these funds is
being requested. It is anticipated that the entirety of these
projects would be put out to bid before the end of April 2005.
Co-Chair Wilken understood that this funding would not be new money
and therefore asked whether approval of these funds would displace
other projects.
Mr. MacKinnon responded that no other project would be negatively
impacted by this request.
In response to a question from Co-Chair Wilken, Mr. MacKinnon
responded that all of these projects have federal match funding.
Co-Chair Wilken asked regarding the federal match for the Kotzebue
project, Item 48, Section 15(a)(1).
Mr. MacKinnon responded that its funding would consist entirely of
federal funds.
Co-Chair Wilken understood therefore that no general funds would be
required and no other projects would be displaced.
Mr. MacKinnon agreed and reiterated that the basis for this request
is that "these projects had moved up in the pipeline in our ability
to get these projects out to bid and out to construction quicker."
Co-Chair Wilken asked for assurance that no other project would be
displaced.
Mr. MacKinnon affirmed that no other project would be displaced.
Senator Stedman asked for further information regarding the
Department's action "that accelerated these projects."
Mr. MacKinnon commented that "to a certain extent," the Department
is experiencing increased productivity. Another factor is the
endeavor to get these projects "out to bid in the winter" in order
to take advantage of short summer construction seasons. Approaching
these projects in this manner could speed the completion of the
project "up a year" as were these projects put out to bid in the
Spring, work could begin in the summer as opposed to being put out
to bid in the summer and having to wait until the following year's
summer construction season. This timing would save a tremendous
amount of administrative expenses associated with the projects.
Co-Chair Wilken asked whether these projects were on a list or were
simply ready to go to bid.
Mr. MacKinnon replied that these projects were on the Statewide
Transportation Improvement Program (STIP) project list or the
State's aviation project list and were ready to bid.
Ms. Slagle noted that many of the projects such as the Haines
Highway: Revetment Reinforcement project involve safety issues that
should be addressed as expediently as possible. Others such as the
Coffman Cove terminal and the South Mitkof Island terminal involve
"timing issues", as work must begin in order to accommodate another
ferry that the Inter-Island Ferry Authority would be bringing
online.
Co-Chair Wilken recalled that the previous Legislative Session, it
had been communicated that the federal airport and surface
transportation funding "was constricting." This funding was
received unexpectedly.
Ms. Slagle acknowledged that the State's federal highway program
funding has been in turmoil this past year. It is currently looking
"very positive" for the State.
Co-Chair Wilken announced that the bill would be HELD in Committee.
ADJOURNMENT
Co-Chair Wilken adjourned the meeting at 11:01 AM.
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