Legislature(2005 - 2006)SENATE FINANCE 532
03/14/2005 09:30 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB63 | |
| SB93 | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 63 | TELECONFERENCED | |
| + | SB 93 | TELECONFERENCED | |
| *+ | SB 46 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
March 14, 2005
9:36 a.m.
CALL TO ORDER
Co-Chair Wilken convened the meeting at approximately 9:36:39 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Donny Olson
Also Attending: SENATOR GARY STEVENS; CHERYL SUTTON, Staff to
Senator Ben Stevens; FRANK HOMAN, Limited Entry Commission; JOE
CHILDERS, Executive Director, Western Gulf of Alaska Fishermen's'
Association, and Vice President, United Fisherman of Alaska; ERIC
SWANSON, Director, Division of Administrative Services, Department
of Administration; STAN HERRERA, Director, Enterprise Technology
Services, Department of Administration; KIM GARNERO, Director,
Division of Finance, Department of Administration;
Attending via Teleconference: From Kodiak: DON ROBERTS
SUMMARY INFORMATION
SB 63-USE SEAT BELT ROAD SIGNS
The Committee heard from the sponsor and a member of the public.
The bill was reported from Committee.
SB 93-FISHING PERMIT AND VESSEL LICENSE FEES
The Committee heard from the sponsor, the Commercial Fisheries
Limited Entry Commission and an industry association. The bill was
held in Committee.
SB 46-APPROP: CAPITAL BUDGET
The Committee heard presentations on the appropriation requests of
the Department of Administration. The bill was held in Committee.
9:38:00 AM
SENATE BILL NO. 63
"An Act relating to road signs encouraging the use of safety
belts."
CS FOR SENATE BILL NO. 63(TRA)
"An Act relating to road signs encouraging the use of safety
belts."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, "Allows the Department of
Transportation [and Public Facilities] to erect and maintain road
signs that encourage the use of seat belts at the site of a fatal
motor vehicle accident."
CHERYL SUTTON, Staff to Senator Ben Stevens, asserted that this
bill "serves great purpose". She read letter to the editor of a
newspaper from Carol Kampen, the mother of a man killed in a motor
vehicle accident who was not wearing a seatbelt, as follows.
It seems there may be some confusion over Ben Stevens' Senate
Bill 63. This is legislation allowing the erection of a
roadside memorial sign encouraging the use of seat belts. In
the Daily News article "Buckling up high on legislators to-do
list" Feb. 9, it states there are six House members who are
opposed to this legislation. A roadside memorial sign program
is already available to the public; you know the little blue
signs that say "Please Don't Drink and Drive" or "Please Drive
Safely" and under the sign it lists the name or names of
people who have lost their lives. Why would they oppose
something that really isn't going to cost anything and will
draw attention to the terrible loss of life due to lack of
wearing seat belts?
I lost my youngest son, Nathan Kampen, in a car accident. He
was not wearing his seat belt. When I requested a memorial
sign saying "Please Buckle Up" or something similar, I was
told it was not available. So I presented by problem to Ben
Stevens, and he was kind enough to help. I truly see no reason
to oppose this legislation. I could always put up one of the
other signs available, but my hope is to remind our young
people to "Buckle Up."
Ms. Sutton added her astonishment in learning that over 50 percent
of motor vehicle related fatalities in Alaska could have been
prevented if the individual had been wearing a seatbelt.
Senator Olson noted numerous testimony in opposition to this
legislation and asked the reason.
Ms. Sutton knew of no reason, and surmised that the objection was
to separate legislation sponsored by Senator Bunde relating to the
use of seatbelts.
DON ROBERTS testified via teleconference from Kodiak that he
supported the enforcement of laws requiring seatbelt use. However
governance of road signs is an administrative function and the
legislative process should not be hampered with these types of
issues.
Ms. Sutton informed that Mrs. Kampen attempted unsuccessfully for
months address this matter through the Department of Transportation
and Public Facilities before she requested assistance from Senator
B. Stevens. The Department does not oppose this bill.
Co-Chair Wilken considering version "G"
Senator Dyson offered a motion to report SB 63, 24-LS0363\G, from
Committee with individual recommendations and accompanying fiscal
note.
Without objection, SB 63 MOVED from Committee with fiscal note #1
from the Department of Transportation and Public Facilities in an
indeterminate amount.
9:44:13 AM
SENATE BILL NO. 93
"An Act relating to commercial fishing permit and vessel
license fees; 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 annual license fee
for commercial fishing vehicles based on the overall length of the
boat. Commercial Fisheries Entry Commission proposed regulatory fee
structure for limited entry permits is estimated to increase annual
revenue by about $2.1 million."
Co-Chair Wilken noted a new fiscal note dated 3/11/05 from the
Department of Fish and Game.
CHERYL SUTTON, Staff to Senator Ben Stevens, referenced handouts
[copies on file] and read testimony into the record as follows.
AT EASE 9:46:11 AM/9:47:20 AM
Senate Bill 93 addresses the Commercial Fisheries Entry
Commission. The first fact we need to understand about the
commission is that they are totally fee-based funded. They
receive no general funds. From the charts in your packets you
can see that the commission has been on a downward trend in
revenue and that revenues and operational costs will soon meet
and revenues will continue in the downward trend under the
current fee structure. This is in spite of the fact that the
commission has greatly reduced their work force. Some of the
contributing factors are the Carlson case, the decline in
value in certain fisheries, and the consolidation of various
fisheries.
Senate Bill 93 accomplishes several purposes. It will bring
the state into compliance with recent rulings in Carlson v.
State of Alaska. The Carlson case was a class action brought
against the state by nonresident fishermen who claimed that
the fee structure was not lawful. The state had charged a 3 to
1 fee differential for nonresidents. The court agreed that the
fees could not be established in this manner and issued a
mandated formula that is now calculated by OMB. I have the
information of what is included and how the fees are
calculated if the committee members would like to review it.
The major component contained in Senate Bill 93 is the removal
of the $300 cap for annual permit renewal currently in
statute. This is an artificial cap because the statute states
that the base fee must "reasonably reflect the different rates
of economic return for different fisheries." The cap results
in fisheries with a very high economic return being charged
fees that are disproportionately low. This bill asks you to
remove the $300 cap and the commission will develop
regulations for the categories and fees through a public
hearing process.
The other Carlson compliance element clarified in the bill is
to charge a nonresident fee differential of $115 only one time
regardless of how many permits a nonresident is issued. The
court said that the state could only charge the differential
once and the commission has been complying with this mandate.
Another nonresident element pertains to those who qualify for
a reduced, or "poverty" fee. These individuals would still be
required to pay the full nonresident differential.
The vessel license fees are also addressed in the bill. A
modest modification is proposed. The 6 vessel length
categories are maintained and the fees are raised by $15, $30,
$60, $75, and $90 respectively.
Ms. Sutton relayed that the United Fishermen of Alaska organization
supports this legislation. The Commission would address the
concerns of those who deem the proposed changes as unfair. She
exampled that the fee increases for smaller vessels would be
reconsidered.
Senator Olson asked for an explanation of chart titled, "CFEC
Revenue Received Compared To Authorized Receipt Supported Services
Budget." This chart plots data for the years FY 98 through FY 10.
One line represents Alaska State Accounting System (AKSAS) Actual
Revenue; another line represents Total Commercial Fisheries Entry
Commission (CFEC) Receipt Supported Services Obligation (includes
Lease, Fishermen's Fund and Commercial Fisheries Division); and the
third line represents CFEC Receipt Supported Services Budget and
Fishermen's Fund. He noted the revenue would match the obligation
amount then dip below a certain threshold.
Ms. Sutton informed that the Commission is obligated to contribute
a fee to the Fishermen's Fund, under the Department of Labor and
Workforce Development. This fee is calculated at 39 percent of the
first $60, which is approximately $24 for resident fisheries and 39
percent of $175 for nonresident fisheries, which is approximately
$68.25.
FRANK HOMAN, Limited Entry Commission, testified that as recently
as 1998, the difference between the obligations and revenue was
approximately $2 million, with the balance deposited to the State
general fund. By FY 08 the revenue would be $800,000 less than the
fiscal obligations and increase to over $1 million by FY 09.
Regardless of the adoption of this bill and the additional $2.3
million generated revenue, the downward trend would continue. The
amount of the deficit could not be calculated.
Mr. Homan stated that in the year 2000 the legislature authorized
the Department of Fish and Game to use excess revenues of the
Commission for fishery related projects. The authorization amounts
have been higher than the actual excess revenues and therefore the
Department has never received the entire authorized amount. He
spoke to the gap between the total CFEC obligation including the
appropriation to the Division of Commercial Fisheries and the base
obligations of the DFEC of its operating budget and fees to the
Fishermen's Fund.
Mr. Homan pointed out that Commission estimates that by the FY 06
the revenues would be less than the total DFEC obligation including
the appropriation to the Division and the approximate $400,000
annual fee to the Fishermen's Fund. The obligation includes a lease
payment for office rent.
Co-Chair Wilken clarified that if this legislation passed the
Commission would receive an additional $2.3 million in FY 06.
Mr. Homan affirmed.
Co-Chair Wilken asked if the revenue line should not reflect this
increase to $5.7 million.
Mr. Homan agreed, but cautioned that if the trend continued the
revenue amounts and obligation amounts would converge again in
about six or seven years.
Co-Chair Wilken clarified this would occur if this legislation were
not adopted.
Mr. Homan responded that without this legislation revenues would be
below obligations in FY 06.
Co-Chair Wilken pointed out that with the passage of this
legislation, the Commission would have a $2 million surplus in FY
08.
Mr. Homan affirmed the Commission would have a surplus of
approximately $2 million for the first couple years after this bill
was implemented; however, the downward trend would resume. The
proposed elimination of the fee limitation would result in
increased revenues.
Co-Chair Wilken surmised that the revenues would remain $5.7
million and by FY 15, the Commission would again be in the current
situation with an impending deficit.
Co-Chair Wilken and Mr. Homan continued deciphering the information
contained on the graph and the projected fiscal impact of this
legislation.
Senator Stedman requested additional explanation of the continual
bias of the downward trend line in relation to the apparent market
value of these adjustments.
Mr. Homan replied that a combination of factors cause the downward
trend. The decision in Carlson vs. State of Alaska is a significant
factor because "the three-to-one was eliminated as a fee." This
legislation would reduce the $115 non-resident differential to a
one-time annual fee with no regard to the number of permits owned.
These factors would cause the trend to continue downward. Other
factors include consolidation in the fisheries, particularly in
halibut and black cod. That would continue downward. Also
consolidation in the fisheries in halibut and black cod at the
federal level has resulted in the State selling fewer permits. The
downward trend in salmon permit values of the past several years is
another factor because the fees are based on the value of the
permit. Limitation of fisheries imposed by the State has also
contributed to the downward trend. The combination of these
factors has resulted in significant decline in the last five years.
The Commission hoped that fisheries values would improve, but the
trend line must be realistic.
Ms. Sutton opined that the Senate has benefited from the excess
revenues of the Commission generated from fees assessed to the
industry. The Legislature has often appropriated these funds for
projects in which general funds were not otherwise available. Those
participating in the fishing industry appreciate this. Continuation
of the surplus would be beneficial. The industry is improving;
particularly the salmon industry, and the situation could change.
Senator Stedman referenced the proposed fee structure, noting the
"40 basis points off of the value of the permit" and asked if this
is also used for "the final entry." He asked if the calculations
remain the same for the proposed increase from $300 to $1,500 or
almost $4,000.
Mr. Homan replied that the two formulas utilized include the four-
tenths of one percent of the permit value in a limited fishery, and
four-tenths of one percent of the gross earnings in an unlimited
fishery. The fisheries Senator Stedman indicated are unlimited
fisheries.
Senator Stedman understood this is a proposed schedule and that if
this legislation passes, the Commission would undertake a public
process to determine the actual fees. Public concerns would be
addressed and considered at that time.
Mr. Homan affirmed the information provided is a proposal. Upon
passage of this legislation the Commission would develop a formal
proposal and hold public hearings. The Commission is already
communicating with fishermen about the fee amounts. He noted the
backup information indicates questions raised with regard to the
finfish category. The removal of the existing maximum fee provision
would result in increased fees. Fishermen have requested the
Commission consider adjusting fees to be based on vessel length
with lower fees for smaller boats.
SENATOR GARY STEVENS understood the fee-based issue, the Carlson
case and the removal of the maximum fee provision. However he noted
the significant excess revenue that would be generated in the first
few years after the enactment of this legislation, thus over
funding the Commission. He suggested fees could be increased
gradually in phases as needed, which would be more equitable.
Mr. Homan responded that the Commission has historically generated
$2 to $3 million more than the budgetary needs. The Commission's
budget needs are "fairly level". The Legislature has appropriated
the additional revenue to fund other commercial fishery projects.
This option would remain. The Commission is only authorized to
expend the amount appropriated by the Legislature.
Ms. Sutton furthered that the addition of the lease payment
obligation could cause some difference in the amount of the total
obligations.
Mr. Homan spoke to the increased obligation resulting in the
transfer of the office lease payment from the Department of Fish
and Game to the Commission. The Department has historically
included the lease in its budget utilizing revenue from the
Commission. This year the component would be transferred.
Senator G. Stevens opined that the Department supports funding
projects from sources other than the general fund. He expressed
concern about overcharging industries.
Ms. Sutton asserted that the industry supports these projects and
does not oppose the fees. The industry intends the Commission to
remain functional. The Commission would maximize efforts to work
with each fishing group to address concerns and to make the fees as
reasonable as possible.
Mr. Homan addressed the suggestion to increase the fees in phases.
This option could be addressed in the Commission's public hearing
process. This may be more functional than requesting additional
statutory action in the event the trend continues downward.
Senator Olson asked why the Department does not address the
underlying problem through this legislation rather than delay
implementing a solution.
Mr. Homan responded that the "hope" is that the current trends
developing would "pull us out of that". He exampled the positive
trends in the salmon business and the marketing. Pricing has
improved for some fisheries. Power troll "is looking good". The
State has embarked on a major marketing effort. These would be
beneficial, although increases would not be realized before FY 06
and the downward trend that would occur at that time. In the long
term, "it will turn around" and much of the problem would be
solved.
Senator Olson countered that the witness was more optimistic than
he was, particularly concerning the fisheries in his district.
Senator Olson predicted that a significant increase would
exacerbate the situation, as fishermen would become discouraged and
demoralized by the additional overhead expense.
Mr. Homan spoke to the current fee structure and indicated that the
rates would not increase significantly for most salmon fisheries.
Senator Stedman noted the basis on permit value and gross revenue,
pointing out that gross revenue fluctuates every year and permit
values change somewhat as well. He asked if the fee structure would
be reviewed annually.
Mr. Homan agreed the values fluctuate and informed that the
Commission reevaluates the fees each year.
Senator Stedman asked about the substantial number of permits held
by the State and asked how these would be affected by this
legislation.
Mr. Homan replied that the Division of Investments within the
Department of Commerce, Community and Economic Development holds
the permits. The permits are not fished.
Senator Stedman asked if fees are levied against these inactive
permits that are held as collateral.
Ms. Sutton responded that the fees are only charged when a permit
is renewed.
Mr. Homan "suspected" the number of permits in State possession was
not more than "a few dozen".
Senator Olson asked how the fees are determined. He noted that
smaller operators would pay the majority of the increase. The
proposed fees for vessels under 25 feet in length would be a 75
percent increase. Vessels 25 to 50 feet in length would have a 60
percent increase. However, vessels over 250 feet would have
increased fees of only 12 percent. He asked how to respond to
smaller vessel owners' complaints of being overcharged.
Mr. Homan replied this pertains to a "different category" of vessel
license, which are established in statutes. The Commission has less
discretion with these fees. The majority of the commercial fishing
fleet in Alaska is comprised of smaller vessels; however, the
proposed fee increase is "fairly modest" of $15 to $30. There has
been no fee increase for ten years. The fee structure could be
changed to provide no increase for the smaller vessels and a higher
increase for larger vessels; however 26 vessels are in the longer
length category and 5,000 shorter-length vessels. Therefore the
fees for the larger vessels must be increased significantly to
offset the revenue that would not be generated from increases of
fees for the smaller vessels.
Ms. Sutton informed that she is a commercial fisherman and that her
vessel is less than 25 feet in length. She has no objection to the
proposed increase. She understands the efforts of the Commission,
although she also understood Senator Olson's concerns. She
interacts with other fishermen frequently and realized the impact
of any increased expenses.
Senator Olson remarked that the fishermen operating in the election
district he represents are "adamantly opposed" to this legislation.
He questioned the testimony regarding the position of the United
Fishermen of Alaska (UFA).
Ms. Sutton replied that the UFA endorsed this bill. She was unsure
if any fishermen from Senator Olson's area are represented on the
board of UFA. She offered to speak to any interested parties on
this matter.
Senator Stedman assumed that the Division of Investments and the
Commercial Fishing and Agricultural Bank (CFAB) and other lenders
held only a dozen permits outside of the fishing marketplace due to
foreclosure. He has been told that a substantial number of permits
are held out of the marketplace because reissuing them would
suppress the value of active permits. He asked if a permit is not
fished, whether the annual fee is still required.
Mr. Homan replied that only two organizations could hold a permit:
the Division of Investments and CFAB. He agreed that because of
difficult seasons in the salmon fishing industry, the market had no
demand for these permits. He did not deem the number of these
permits to be significant. Statute provides that any permit not
paid for two years would revert to the State. Some permit holders
do not pay permit fees for two years and do not fish. However if
the permit holder decides to fish the permit again, the fees must
be paid.
Senator Stedman asked if the fee payments are then paid
retroactive.
Mr. Homan affirmed.
JOE CHILDERS, Executive Director, Western Gulf of Alaska
Fishermen's Association, and Vice President, United Fisherman of
Alaska, testified that the UFA did endorse this bill because it was
believed that the funding must continue for fisheries management in
Alaska. Some funds are transferred to other divisions. The UFA also
supported efforts of the Division of Commercial Fisheries. The
Commission assured the UFA that the proposed fee increases would
undergo an extensive administrative hearing process.
Mr. Childers next spoke in his capacity of the Western Gulf of
Alaska Fishermen's Association. The members of this group are
primarily involved in ground fish fisheries, but participate in
many fisheries, including squid, sardines and pea cod in Alaska and
the West Coast. They include long-line, purse seine, trawl and pot
fishing. Approximately 80 percent of the fleet is comprised of
vessels 60 feet in length or less. Many members were concerned
about the proposed fee increase for the miscellaneous finfish
statewide category, which includes all trawl fishery vessels. The
current fees are based on the value of the permit of the fishery,
which is a reflection of possible net profit. The limited entry
system has changed the fisheries from "input control" to "output
control quota share programs." He exampled a member of the
Association who was fully vested as a long line fisherman,
maximizing quotas for several fisheries. His gross earnings for
sablefish and halibut fisheries are likely significantly over $1
million annually. The license fees for these fisheries are
relatively low; however the proposed fee increases for trawl
fisheries would be almost $4,000, although trawl fisheries generate
significantly less income.
Mr. Childers also relayed Association concerns with fees based on
vessel length of more or less than 60 feet. This delineation is
irrelevant. Instead, horsepower is a more significant factor in the
ability to increase income. Many vessels participating in the
salmon fishery are 58 feet in length with "tremendous" horsepower,
and are able to hold 168,000 pounds of fish. This is compared to
74-foot vessels with less horsepower and able to hold only 110,000
pounds of fish. Therefore, fees imposed based on vessel length do
not reflect actual earnings potential. As fisheries "migrate away"
from entry permits to quota share systems, taxing output of
fisheries must be considered.
Mr. Childers warned that the proposed system of fees based on
vessel length would "lead to the demise" of smaller vessel
operators participating in commercial fishing. This has occurred in
the Bering Sea Pollock fishery. It is economically efficient to
maximize the use of vessels and the licenses are based on vessels.
This would result in fewer vessels. The fees should be modified to
tax quota shares instead.
Mr. Childers stated that UFA and the Association support this
legislation because they expect extensive dialog with the
Commission.
Senator Dyson agreed with the witness' comments. He spoke of the
history in Alaska in taking arbitrary actions to attempt to
accomplish social and local goals. The issue of vessel length
categorization is an example of unintended consequences, in that
vessels have been constructed of poor design, are not safe and
could not be utilized for other fisheries. The legislature must
"get out of the business of designing boats" and allow the
marketplace and the fisherman flexibility needed.
Senator Olson asked the witness' opinion of the demise of the
smaller operators' involvement in the industry. He asked how could
the downward trend be reversed.
Mr. Childers recommended a system of licensing or a fee structure
based on actual output from a fishery. He has been a fisherman
since 1966 and currently salmon trolls and has a halibut quota in
Southeast. This qualifies him as a smaller vessel operator,
although he informed he operated large vessels in the past. The
penalty to marginal producers is high, especially if the fees
increase. "If you can't afford to fish, you certainly can't afford
to pay a fee increase"; however more lucrative fisheries could
absorb large increases of 500 percent.
Senator Olson questioned why the organizations did not assist in
proposing legislation that could provide a realistic and practical
solution rather than the current proposal.
Mr. Childers replied that the Association initially had misgiving
about this bill. UFA endorsed this bill because they determined
that a fee increase is necessary for current and future operations.
Another approach to this issue is necessary and he was hopeful that
the administrative hearing process, as well as debate on this bill,
would result in solutions.
Co-Chair Wilken ordered the bill HELD in Committee.
10:42:40 AM
SENATE BILL NO. 46
"An Act making capital appropriations and appropriations to
capitalize funds; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
The Committee heard presentations on the Governor's capital funding
requests for the Department of Administration.
Department of Administration
State of Alaska Network Security Infrastructure Upgrades
$3,537,500 Info Svc fund
Reference No.: AMD40606
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
On January 18, 2005 the State of Alaska Wide Area Network was
the target of a cyber attack which resulted in the defacement
of a web server owned by the Department of Health and Social
Services. Upon further investigation, it was determined the
extent and scope of the cyber attack was much larger than to a
single device. In a cooperative effort with SOA agencies,
approximately 110 servers appeared to have experience[d]
similar "signatures" of this attack. The significance of these
attacks prompted notification to the MS.-ISAC (multi state
information sharing and analysis center.)
ERIC SWANSON, Director, Division of Administrative Services,
Department of Administration, testified this project is an
extension of the $5 million FY 04 supplemental appropriation for
security activities.
STAN HERRERA, Director, Enterprise Technology Services, Department
of Administration explained that a portion of these funds would be
expended to assist in addressing system vulnerability. The
remainder of the funds would be utilized to complete the project
undertaken with the FY 04 supplemental appropriation to purchase
hardware and software in response to the cyber attack identified by
a federal task force.
10:46:24 AM
Alaska Land Mobile Radio (ALMAR) Infrastructure Upgrades
$6,405,000 general funds
Reference No.: AMD40605
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
Phased-underway
Funding in the amount of $6.175 million is needed in FY 05 to
uphold the State of Alaska's obligation to the Department of
Defense in a joint partnership for the Alaska Land Mobile
Radio (ALMR) Project.
Mr. Swanson noted an upcoming presentation to the Committee on this
project.
10:47:07 AM
Statewide Administrative System Replacement Phase 1 - Human
Resources and Payroll
$20,000,000 Debt Fin fund
Reference No.: 40081
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2009
One-Time Project
The Department of Administration is responsible for operating
statewide payroll and accounting systems. These systems are
aging, and need to be replaced.
Mr. Swanson outlined this request.
KIM GARNERO, Director, Division of Finance, Department of
Administration, read a statement into the record as follows.
When I came to this job 6 years ago, I recognized the
vulnerability we have with our existing payroll system. At
that time there were just over 100 licensed users of Tesseract
software, and now there are less than 50. The days of this
software product's viability are numbered, and that is
something that impacts almost all of state government. This
application processes payroll for the court system, the
legislature, and the executive branch, including most of the
corporations (all but University, RR, AHFC).
Replacing the payroll system for an organization as large and
complex as the State of Alaska is major undertaking. We
received capital appropriations to begin the process in FY
2003 and FY 2004. We've spent about half of the $900,000
appropriated to date, mostly on this business case. The work
underlying this document took about a year to complete and the
scope was not just payroll and human resources, but all
statewide administrative systems. We included accounting, and
procurement, and budget functions and involved the business
process owners for each function. The business case was
completed in September 2003 and it is available on the
Division of Finance website.
Reading it, you'll find our administrative systems need
serious overhaul.
• Our accounting system is 20 years old, written in COBOL,
and becoming more difficult to maintain.
• Our human resource systems are a mix of standalone
databases.
• We have no statewide system for procurement whatsoever.
• And the systems we do have, don't talk together well.
Over the next several years, we are faced with the job of
implementing current technology to address these deficiencies.
We decided to start with the payroll and human resources
systems, because that is where our greatest risk lies. A
necessary related project is a reporting database that will
contain information from both the old and new systems for
historic and management needs. The eventual goal is for the
reporting database to include data from multiple
administrative functions, which would be a great improvement
over our current reporting capabilities.
Our plan is to work through the complicated task of defining
our requirements, choosing the best solutions, and negotiating
long-term contracts that we can afford. The actual nature and
cost of the solutions will not be known until we work through
the process, and we can't work through the process without an
appropriation to fund it.
Co-Chair Wilken noted the funding source is "debt financing" and
asked if this is a line of credit.
Ms. Garnero understood the same.
10:50:39 AM
Public Building Facilities Projects
$9,902,000
$6,902,000 Bond Funds
$3,000,000 Public Bldg fund
Reference No.: 39025
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2004 06/30/2005
On-Going Project
Funding is necessary for continued maintenance of state owned
facilities that make up the group know as Public Building Fund
facilities. These facilities include the State Office
Building, the Alaska Office Building, the Community Building,
the Douglas Island Building, the Atwood Building, the
Fairbanks Regional Office Building, the Court Plaza Building,
and the Dimond Court House.
Mr. Swanson reported that priority deferred maintenance needs have
been identified for all the buildings. He noted this list changes
as boilers malfunction or other emergency repairs become necessary.
Co-Chair Wilken asked if the bond funds are related to the
settlement from the case involving Amerada Hess Corporation and
other oil producers.
Mr. Swanson answered yes.
Co-Chair Wilken clarified that the public building fund is the
account paid into by agencies occupying space in the included
facilities.
Mr. Swanson affirmed.
10:52:31 AM
Enterprise IT Projects
$3,706,000 Info Svc fund
Reference No.: 40437
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
One-Time Project
This category consists of the 10 IT implementation projects
developed with a contract with Unisys Corporation, and other
enterprise projects requested by State agencies.
Mr. Herrera told of the IT projects and operations constructed for
various departments that total approximately $260 million. This
request would implement systems that would increase efficiencies to
the State and include a server consolidation, help desk
consolidation, and asset management.
10:53:32 AM
Data Center and Equipment Upgrades
$3,297,000 Info Svc fund
Reference No.: 40435
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
Phased - new
The purpose of these projects is to upgrade the outdated PBX
phone systems; upgrade the failing environmental systems in
the data centers such as air conditions, fire suppressant, and
power distribution; update the Anchorage Data Center to make
it "production ready" for Anchorage based hosting and to
mirror Juneau operationally for 24x7 backup purposes; and to
replace the IBM Mainframe serve as it is projected to reach
processing capacity in early FY06.
Mr. Swanson overviewed this item.
Mr. Herrera stated this request is for funding for the
establishment of a disaster recovery system. The State operates two
data centers, one located in Juneau the other located in Anchorage.
Co-Chair Wilken asked if Reference No. 40437 is a phased new
revenue project.
Mr. Herrera affirmed.
10:54:48 AM
Maintenance Projects for Facilities Outside the Public
Building Fund
$3,098,000 Bond Funds
Reference No.: 39034
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2007
On-Going Project
Funding is necessary for maintenance projects in facilities
outside the public building fund.
Mr. Swanson gave examples of facilities not included in the Public
Building Fund. A list of priority projects has been compiled for
these facilities.
Senator Olson asked why these buildings are not included in the
Public Building Fund.
Mr. Swanson replied that the Public Building Fund was initially
established as a pilot project and included eight buildings. The
program has been successful and considerations are underway to
include additional buildings.
Senator Olson asked if funds would be more readily available for
these projects if the facilities were included in the Public
Building Fund.
Mr. Swanson responded that the manner of funding would change with
rent being charged to the State agency occupants of the buildings.
Some buildings, such as the Governor's residence would be addressed
individually.
Senator Stedman asked if the funding for this item relates to the
fund source referred to as Amerada Hess, as well.
Mr. Swanson answered yes.
10:56:57 AM
State of Alaska Telecommunication System (SATS) Projects
$1,615,000 Info Svc fund
Reference No.: 40438
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
One-Time Project
These projects will provide maintenance on the degraded SATS
infrastructure which is the backbone of the state Wide Area
Network (WAN) and the Alaska Land Mobile Radio (ALMR)
projects. Also included is an inventory of all equipment per
site and an assessment of structural integrity and
performance.
Mr. Swanson overviewed this request.
Mr. Herrera explained this funding would be utilized for various
projects, including purchasing battery upgrades for 12 sites, and
SATS test equipment replacement at approximately 128 sites. Some of
these sites are over 30 years old and site assessments must be
completed to determine necessary upgrades. The project would
determine the users of the systems and reinstate the chargeback
method that was eliminated at the time the State entered a
contractual agreement with a telecommunications company. That
contract has since been terminated and the chargeback method is
again necessary.
10:58:40 AM
Mr. Swanson clarified that the Governor's proposed FY 06 operating
budget contains a section that capitalizes the funds proposed for
these capital projects.
10:59:09 AM
License Plates, Tabs, and Manuals
$385,000 Rcpt Svcs fund
Reference No.: 40440
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2010
On-Going Project
Funding will provide for the purchase of license plates and
tabs to maintain statewide inventory levels necessary for
their required continued issuance. The division is required by
statute (AS 28.10) to issue plates and tabs and cannot run
out. The funding also provides for the purchase of the four
different driver manuals and law books that must be available
at all DMV offices.
Mr. Swanson read the summary information.
10:59:45 AM
DMV Take-a-Number System
$100,000 Rcpt Svcs fund
Reference No.: 40073
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2005 06/30/2007
Phased-new Project
Expansion of the take a number system used in the Anchorage
office.
Mr. Swanson explained this system allows customers to "take a
number" and know the amount of time before they would be served.
This also provides a method to determine the amount of time taken
to provide services.
11:00:56 AM
AOGCC Leasehold Improvements
$75,000 AOGCC Rcpt funds
Reference No.: 40072
Category: General Government
Location: Anchorage Areawide
Election District: Anchorage Areawide
Estimated Project Dates: 07/01/2005 06/30/2007
One-Time Project
Funds will be used to purchase a space saving filing system
and to purchase and install a ventilation system for the
confidential samples storage room.
Mr. Swanson explained that the space would be remodeled and
reconfigured to allow for the new filing system. Also, because the
mineral samples held in the office emit toxic odors, a ventilation
system would be installed for the comfort of staff.
Co-Chair Wilken ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Wilken adjourned the meeting at 11:02 AM
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