Legislature(2005 - 2006)SENATE FINANCE 532
02/07/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB264 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 264 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
February 7, 2006
9:04 a.m.
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:04:13
AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: CHERYL FRASCA, Director, Office of Management and
Budget, Office of the Governor; DAN SPENCER, Director, Division of
Administrative Services, Department of Public Safety; ERIC SWANSON,
Director, Division of Administrative Services, Department of
Administration; STAN HERRERA, Director/Chief Technology Officer,
Enterprise Technology Services, Department of Administration; SAM
THOMAS, Director, Division of Administrative Services, Department
of Commerce, Community, and Economic Development; RAY RIUTTA,
Executive Director, Alaska Seafood Marketing Institute, Department
of Commerce, Community and Economic Development; SHARLEEN GRIFFIN,
Director, Division of Administrative Services, Department of
Corrections; JOHN CRAMER, Director, Division of Administrative
Services, Department of Military and Veterans Affairs; KATHRYN
DAUGHHTEE, Director, Division of Administrative Services,
Department of Law; NICO BUS, Acting Director, Division of Support
Services, Department of Natural Resources; BOB BARTHELOW, Chief
Operating Officer, Alaska Permanent Fund Corporation, Department of
Revenue; NANCY SLAGLE, Director, Division of Administrative
Services, Department of Transportation and Public Facilities
Attending via Teleconference: From Anchorage: CRAIG TILLERY, Chief
Assistant Attorney General, Statewide Section Supervisor,
Environmental Section, Civil Division, Department of Law
SUMMARY INFORMATION
[Note: Technical difficulties occurred and audio recording was
lost. Audio for this meeting is available at www.ktoo.org/gavel.
SB 264-FAST TRACK SUPPLEMENTAL APPROPS
The Committee heard presentations on the funding requests of the
Department of Public Safety, the Department of Administration, the
Department of Commerce, Community and Economic Development, the
Department of Corrections, the Department of Military and Veterans
Affairs, the Department of Law, the Department of Natural
Resources, the Department of Revenue, and the Department of
Transportation and Public Facilities. The bill was held in
Committee.
9:04:44 AM
Co-Chair Wilken noted the Senate Rules Committee had introduced
four FY 06 supplemental appropriation bills on behalf of the
governor. Co-Chair Wilken summarized the four bills as follows.
SB 232
Description: Energy Supplemental
General Funds: $51,988,300
Total Funds: $68,021,600
SB 233
Description: Capital Supplemental
General Funds: $129,494,500
Total Funds: $130,487,900
SB 264
Description: Fast Track Supplemental
General Funds: $13,493,700
Total Funds: $45,263,700
SB 263
Regular Supplemental
Description: Regular Supplemental
General Funds: $99,908,900
Total Funds: $72,282,300
Total General Funds: $294,885,400
Total Funds: $317,055,500
9:05:47 AM
Senator Dyson understood that SB 264 would not be reported out at
this meeting.
Co-Chair Wilken affirmed.
9:06:14 AM
SENATE BILL NO. 264
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; 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.
CHERYL FRASCA, Director, Office of Management and Budget, Office of
the Governor, noted the total amount of general funds requested in
this legislation is $13.5 million. Of that amount $4.5 million is
intended to fund expenses incurred from past disasters. The
Department of Law is requesting $2.6 million of the total to pay
judgments and claims. Paying the judgment and claims debts through
the supplemental appropriation process would avert interest
expenses that would otherwise accrue if the funding were
appropriated on July 1, 2007 through the regular fiscal year
budgetary process.
Ms. Frasca continued over viewing this bill, noting funds are
requested for the Department of Corrections to address inmate
population increases and inmate health care. The inmate population
is not only increasing, but aging as well and medical expenses are
subsequently increasing.
Ms. Frasca directed attention to one capital appropriation request
for the Department of Transportation and Public Facilities for
airport improvements.
9:08:28 AM
Department of Public Safety
Section: 7
Results Delivery Unit (RDU): Council on Domestic Violence and
Sexual Assault
Supplemental Need: This request would provide funding to
maintain the operation of the Kotzebue domestic violence
shelter. Program previously funded by a HSS grant that has
since been determined to be an unallowable use of federal
funds.
$350,000 General Funds
DAN SPENCER, Director, Division of Administrative Services,
Department of Public Safety, reminded the Committee of discussions
held the previous year about whether the grant funds would be
appropriate to expend on shelters. After review, it was determined
that the grant funds could not be utilized in this manner. Although
the legislature increased funding to the Council in the FY 06
operating budget, the funds were not intended for the Kotzebue
shelter, due to the expectation that the grant funds would be used.
9:10:35 AM
Co-Chair Green asked if the Department intends to request general
funds for this purpose for FY 07.
Mr. Spencer replied that the Governor's proposed FY 07 operating
budget contains a request for this component.
Co-Chair Green asked if Temporary Assistance for Needy Families
(TANF) funds could be used for this.
Mr. Spencer answered they could not.
9:11:08 AM
Co-Chair Wilken asked about the federal requirements for allowable
use of these funds.
Mr. Spencer indicated he would provide this information.
9:11:23 AM
Senator Stedman understood the importance of the domestic violence
shelters but questioned the immediate funding need and requested
information on how other shelters are funded.
9:11:53 AM
Department of Administration
Section: 1
RDU: Capital
Supplemental Need: Begin telephone system replacement and
stabilization phase 1 project will be reduced by $1 million.
The state is facing serious issues on the existing nearly 13-
year-old Private Branch Exchange (PBX) telephone switches in
Juneau, Anchorage and Fairbanks that support approximately
15,000 telephones in those locations. The current provider
will not support the system after April 1, 2006.
$1,000,000 Information Services Fund
And
Section: 4(b)
Fund Transfer
RDU: Information Services Fund
Supplemental Need: Capitalize Information Services Fund for FY
06 implementation of the telephone system replacement and
stabilization phase 1 capital project.
$1,000,000 General Funds
ERIC SWANSON, Director, Division of Administrative Services,
Department of Administration, testified the two requests are
interrelated. The funds requested were originally submitted as a
portion of the funds contained in the Governor's proposed FY 07
capital budget. However, due to problems with the existing system,
it was decided that a portion of the funds were needed sooner to
address the issue.
9:13:18 AM
STAN HERRERA, Director/Chief Technology Officer, Enterprise
Technology Services, Department of Administration, told about the
phone system utilized by State agencies. Last fall, the Department
received notice from Nortel Systems, the current service provider,
that as of April 1, 2006, it would no longer support Private Branch
Exchange (PBX) switches the existing system utilizes. The
Department has received proposals from carriers to assist the State
in updating its technology. Until those changes are made, the
recent system outages would continue and a catastrophic failure
could occur. Such a failure would affect all areas of the state and
threaten health and safety.
9:14:58 AM
Co-Chair Wilken surmised that upon this expenditure, the
Information Services Fund balance would be zero.
Mr. Swanson affirmed.
9:15:26 AM
Senator Bunde asked why this request had not been submitted
earlier, given that the Department learned of the need in October
2005.
Mr. Herrera stated the intent to be proactive on the matter and
stabilize the PBX system as new technology was attained.
Senator Bunde questioned why the request is not included in the
regular operating budget rather than the supplemental budget.
Mr. Swanson replied that the request had originally been to receive
the funding for FY 07. However, due to recent instability of the
phone system, the Department decided to begin the project earlier.
9:17:02 AM
Senator Dyson asked if the Department was "irrevocably committed"
to the proposed upgrade system.
9:17:14 AM
Mr. Herrera responded that the intent is to implement a new
technology. The Department had requested a supplemental
appropriation for FY 05 last year to address security of the
network infrastructure. The goal is to combine both the telephone
and network into one system.
Senator Dyson asked if contracts for this had already been issued
and whether the work had started.
Mr. Herrera explained the Division has begun a process of accessing
the "environment", including hardware. He reminded of separate
lightning strikes to the equipment in Juneau and Anchorage, and the
damage caused. The Division has since been engaged in a "catch-up
game" to keep these systems functioning.
Senator Dyson again asked if contracts had been issued.
Mr. Herrera answered they had not.
9:19:25 AM
Senator Hoffman asked if the total FY 07 request of $21 million
would be general funds.
9:19:44 AM
Mr. Herrera replied that the amount of the capital project request
is $15 million.
Senator Hoffman referenced the supporting documentation for this
request that is categorized as a phased project estimated to be
completed in FY 09 at a total cost of $21 million.
Mr. Herrera agreed this is the projected total to address the
entire state system including service to rural areas. The $15
million amount is intended to fund the upgrade of the Juneau,
Anchorage and Fairbanks system. The outlying communities would be
addressed later.
Senator Hoffman asked if the funding source is entirely general
funds.
Mr. Swanson responded that the $1 million requested for FY 06 and
the remaining $14 million requested for FY 07 would be general
funds. He could not predict the funding source for the portions of
the project planned for FY 08 and FY 09. Sufficient reserves could
be available in the Information Technology Fund by that time for
the final phases of the project.
9:21:38 AM
Co-Chair Green asked if this project would involve increased
charge-backs levied to all State agencies.
Mr. Swanson responded that once the new system was installed and
operable, the Division would seek to assess charge backs.
Co-Chair Green surmised that funding requests would therefore be
made even after completion.
Mr. Swanson stated that the charge-back funds could be collected
for future projects.
9:22:30 AM
Co-Chair Wilken characterized the situation as a "sinking fund".
Mr. Swanson responded that the charge back receipts would be held
for future appropriations.
Co-Chair Wilken requested additional information of the Information
Technology Fund and the plan for funding the upgrade project.
Co-Chair Wilken also asked how this project relates to a separate
funding request for a voiceover protocol system.
Mr. Swanson answered that the request before the Committee
represents the first portion of the planned upgrade and is to
address needs to protect the system from failure. He told of the
consequences of a failure.
Co-Chair Wilken asked if the $15 million requested this legislative
session is embodied in the estimated total project cost of $21
million.
Mr. Herrera replied that $21 million is the projected cost of the
entire project.
Co-Chair Wilken clarified that the total cost of the project would
not be $36 million.
Mr. Swanson affirmed.
Co-Chair Wilken asked the situation with the current service
provider, Nortel Systems.
Mr. Herrera explained that effective April 1st the State would be
required to post $1 million bond for every request submitted for
support on the existing system, and the provider would be obligated
to only provide the "best effort".
Co-Chair Wilken asked if the notification received in October 2005
was the first time Nortel Systems advised the State about the
curtailed support services.
Mr. Herrera told of the notification received from Nortel Systems.
Co-Chair Wilken asked if the company is a monopoly. The State of
Alaska is likely a sizable customer and Nortel Systems was not a
"good partner" in only providing six months notice on the matter.
9:26:32 AM
Senator Bunde pointed out that the current system has lasted 13
years. He asked the projected lifespan of the new system.
Mr. Herrera was confident that the new system would last "quite a
while", i.e. approximately the same as the existing system. It
would employ the technology being adopted worldwide.
Senator Bunde, understanding the request for proposals (RFP)
process, asked if the Division would attempt to continue
contracting with the same service provider.
Mr. Herrera replied that the Division would likely not do business
with such a company that "doesn't take the state of Alaska at
heart."
9:28:02 AM
Senator Dyson understood that Nortel had been recommending that the
State upgrade its switches.
Mr. Herrera affirmed and reminded that the State had contracted
with Alaska Communications Systems (ACS) to do this. That contract
was cancelled before the upgrades were complete. During the past
four to six years, the existing system was not supported due to the
expectation that it would be replaced.
Senator Dyson challenged the characterization that Nortel had not
alerted the State in a timely manner, as the company had been
encouraging the upgrade.
Senator Dyson asked if the Department unsuccessfully attempted to
implement a "voice over" Internet system.
Mr. Herrera affirmed. Upon analysis of the failure, it was
determined that the technology was not the cause, rather the
company selected to provide the technology was incompatible with
the common systems.
9:30:37 AM
Senator Stedman spoke to depreciation of equipment and "sinking
funds". He asked why a funding mechanism was not implemented to
automatically upgrade systems as necessary. He asked if the
Department of Administration collects chargeback's from other
agencies and "absorb" those funds for other purposes.
Mr. Swanson explained the chargeback's would be levied against the
appreciation of these services and utilized for future changes to
the system.
9:31:47 AM
Senator Olson asked the Department's plan if the entire amount were
not appropriated.
9:32:04 AM
Mr. Swanson responded that if the full $1 million were not
appropriated in this legislation, the Department would request the
balance in the FY 07 regular operating appropriation.
9:32:50 AM
Department of Commerce, Community and Economic Development
Section: 2(a)
RDU: Office of Economic Development
Supplemental Need: The Office of Economic Development is
hosting an event at the Boston International Seafood Show that
promotes the uniqueness of wild Alaska seafood on March 13,
2006
$75,000 Statutory Designated Program Receipts
SAM THOMAS, Director, Division of Administrative Services,
Department of Commerce, Community and Economic Development,
testified to the benefits of participation in the seafood show to
counter the impacts of farmed salmon on the fishing industry in
Alaska.
9:34:34 AM
Senator Stedman asked why this request was not included in the
regular FY 06 operating budget.
9:34:45 AM
Mr. Thomas replied that he was new in the position and the previous
director did not submit a request. He informed that this show is an
annual event and that a request would be submitted each year.
9:35:19 AM
Senator Olson asked if a group attended the previous show and the
cost of that participation.
9:35:35 AM
Mr. Thomas responded that the Department did participate at a total
cost of $140,000. The amount is expected to be less for this year,
as the fishing industry is expected to contribute more funds.
9:36:29 AM
Section: 2(b)
RDU: Alaska Seafood Marketing Institute
Supplemental Need: Increase RSS match for the Alaska Seafood
Marketing Institute's export marketing program, which received
a federal increase in January 2006. Advance notification to
public relations contractors is required, therefore March
approval is requested.
$395,000 Receipt Supported Services
RAY RIUTTA, Executive Director, Alaska Seafood Marketing Institute,
Department of Commerce, Community and Economic Development,
testified these funds would be utilized as matching funds for a
federal appropriation. The additional federal funds have been
approved for a market access program to fund overseas marketing of
Alaska Seafood.
9:37:55 AM
Co-Chair Wilken asked if the matching funds are mandatory to secure
the federal funding.
9:38:03 AM
Mr. Ruitta affirmed that matching funds are required.
9:38:05 AM
Co-Chair Green asked the additional services that would be offered
with the increased funding.
9:38:11 AM
Mr. Ruitta told of the additional marketing efforts that would be
undertaken in Asia and agreements already reached.
9:38:33 AM
Department of Corrections
Section: 3(a)
RDU: Out-of-State Contractual
Supplemental Need: Timely payments are essential in complying
with contractual requirements agreed upon for housing Alaska
inmates. The increased prison population has mandated the
department obtain additional beds out-of-state, up to a total
of 1,000 prisoners by year-end. The current contract is
written for 760 beds while the department estimates a need for
850 beds by March and 1,000 beds by June 30.
$1,168,700 General Funds
SHARLEEN GRIFFIN, Director, Division of Administrative Services,
Department of Corrections, testified that the increase in inmate
population has exceeded emergency capacity by 270 to 300. Several
projects are underway to increase the number of beds available
within Alaska. Meanwhile, more offenders must be transferred to
facilities in the state of Arizona. This funding request would
phase those transfers. Capacity would still be exceeded.
9:40:25 AM
Section: 3(b)
RDU: Inmate Health Care
Supplemental Need: The department is estimating that they will
potentially run out of funds available to pay contract and
medical providers as early as March, 2006. The additional
funding is needed to meet the medical obligations for the
aging and increased prison population and for the sharp
increase in the number of inmates needing dialysis, cancer
treatment, and treatment for other life-threatening
conditions, along with the increased cost for providing those
medical services.
$2,600,000 General Funds
Ms. Griffin stated that overcrowding has resulted in more health
care and emergency health care needs. Catastrophic inmate health
care has cost $1.9 million to date since January 2006. These costs
are not expected to decrease and more cases are anticipated. The
funding requested in this item would by utilized to pay the costs
for the second half of the fiscal year, from January through June
2006.
9:41:32 AM
Section: 3(c)
RDU: Inmate Health Care
Supplemental Need: Funding is needed to pay three contractors
and several fee-for-service providers for services rendered
prior to 6/30/2005. These providers have not been paid and are
charging interest for non-payment. Prompt payment would avoid
further interest charges
$755,000 General Funds
Ms. Griffin noted this funding would be utilized to cover health
care costs incurred in FY 05. Supplemental funding was requested
for FY 05, but the amount was inadequate and some vendors have not
been paid. These costs were incurred in Alaska and Arizona.
9:42:50 AM
Fund Transfer
Section: 4(a)
RDU: Disaster Relief Fund
Supplemental Need: Funding needed for:
1) 2002 Kenai Peninsula Flood shortfall $160,300
2) Bering Strait Sea Storm - additional federal project
funding was approved Jan. 2006, 25% match is required
$839,600
3) 2005 Spring Flood Funding (Emmonak, Alakanuk and
McGrath) shortfall $553,700
4) 2005 West Coast Storm (Nome area) $1,599,500
5) 2005 Southeast Storm $1,084,600
6) Less the unobligated balance of $93,900 in the fund
The department will be unable to continue meeting disaster
related expenditures until the supplemental is approved.
$4,143,800 General Funds
JOHN CRAMER, Director, Division of Administrative Services,
Department of Military and Veterans Affairs, testified to the
number of ongoing and federally declared disasters in which the
federal government has allowed claims. The unobligated balance of
the Disaster Relief Fund is approximately $93,000.
9:44:13 AM
Co-Chair Wilken clarified that expenditure for the five items would
essentially deplete the Fund.
9:44:21 AM
Mr. Cramer explained.
9:44:40 AM
Senator Stedman assumed that the disasters listed occurred during
previous years and the funding requested is for clean-up efforts.
He asked why the appropriation is requested in this legislation
rather than the FY 07 regular capital budget.
9:45:21 AM
Mr. Cramer replied that the Fund must be replenished because the
Department must respond to disasters. He described the time
involved after a disaster occurs for the Department to respond and
citizens to file claims. The Department has been attempting for
three years to secure federal funding for the listed disasters that
occurred several years prior. The federal government has agreed to
appropriate funding, which requires 25 percent matching funds. The
amount requested in this item would provide those matching funds.
9:46:29 AM
Senator Stedman requested additional information on the listed
disasters. He questioned the need to provide funding immediately
for the floods and mudslides that recently occurred in Southeast.
The danger has passed and the "mud isn't going anywhere". He
understood most of the funding requested in this item is for clean-
up expenses and suggested the appropriation could be made in two
months through the FY 07 regular budget process. He intended to
limit supplemental appropriations in favor of funding through the
regular budget.
9:48:04 AM
Co-Chair Wilken clarified Senator Stedman's request, asking what
portion of the requested funding had already been expended.
9:48:22 AM
Mr. Cramer would provide additional information. Much of the
funding requested to address the disasters that occurred in 2005
would be appropriated to the affected municipalities. He exampled
the damaged roads and utilities that the City and Borough of Juneau
expended funds to repair. The municipality has requested
reimbursement for these expenses; however the Disaster Relief Fund
balance is insufficient to provide this reimbursement. The funds
are requested at this time to allow for these payments. The regular
FY 07 proposed budget requests additional funding for future repair
expenses.
9:49:51 AM
Senator Stedman understood the need to clear roads, but other
cleanup activities were not urgent. He suggested reviewing the
matter to identify which efforts had been completed.
9:50:28 AM
Co-Chair Wilken asked if the purpose would be to determine what
expenditures were made in FY 06 and which would occur in FY 07.
9:50:40 AM
Senator Stedman affirmed.
9:50:44 AM
Co-Chair Wilken surmised the funds obligated but not expended could
be included in the FY 07 appropriation.
9:50:58 AM
Mr. Cramer explained that claims are submitted from the moment a
disaster occurs to up to five years after the event. Reimbursement
for the listed disasters would not be complete for at least two
years, and as many as five years. As claims are submitted, they are
paid from the Disaster Relief Fund.
9:52:22 AM
Co-Chair Wilken suggested Senator Stedman and Mr. Cramer review
this later.
9:52:37 AM
Senator Hoffman clarified that the federal government has approved
most of the claims submitted for reimbursement. The funding
requested in this item is to fulfill the 25 percent match
requirement to receive the federal funding. The funds are intended
to reimburse communities for unanticipated expenses incurred in
responding to a disaster. This request is included in the fast
track supplemental to mitigate the consequences of these expenses
to municipalities.
9:53:25 AM
Mr. Cramer affirmed.
9:53:30 AM
Senator Olson asked if the amount requested in this item would
secure $12 million federal funds.
9:53:39 AM
Mr. Cramer responded this is primarily accurate. Certain criteria
must be met to obtain a federal disaster declaration, a process
that takes time. Declarations for the listed disasters were only
recently made.
9:54:28 AM
Department of Law
Section: 5
RDU: Civil Division, Deputy Attorney General's Office
Supplemental Need: Judgments and Claims - actual amount is
$2,621,958.48.
$2,622,000 General Funds
KATHRYN DAUGHHTEE, Director, Division of Administrative Services,
Department of Law, testified that interest expenses could be saved
if the judgments and claims were paid sooner. She offered to detail
the cases.
9:55:39 AM
CRAIG TILLERY, Chief Assistant Attorney General, Statewide Section
Supervisor, Environmental Section, Civil Division, Department of
Law, testified via teleconference from Anchorage that he was
available to respond to questions.
9:55:54 AM
Co-Chair Wilken noted detailed information on the cases was
provided and suggested the Department could address specific
questions at this time, or later.
9:56:31 AM
Senator Stedman assumed that the $2.6 million reflected the actual
cost of the settlements. Holding these funds and delaying payment
should generate interest. He asked the amount of interest that
would be saved by paying sooner compared to the earnings generated
from holding the funds.
9:57:49 AM
Ms. Daughhetee agreed that the State general fund generates
interest. Various rates of interest are assigned to each case
depending on the timing of the judgment. The interest rate is
calculated at three points above the Federal Reserve rate and
changes every year.
9:58:48 AM
Co-Chair Wilken surmised that if this amount were appropriated by
March 1, 2006, the State would avoid four months of interest
calculations.
9:59:01 AM
Ms. Daughhetee qualified that processing and recording would be
required and that funds appropriated March 1 would likely be posted
by March 31.
9:59:20 AM
Senator Dyson asked the approximate amount generally budgeted for
lawsuit settlements.
9:59:30 AM
Ms. Daughhetee answered that these expenses are not budgeted.
9:59:34 AM
Senator Dyson asked for a comparison of the judgments and claims
awarded in FY 06 to previous years.
9:59:44 AM
Ms. Daughhetee replied that the total is usually between $1 and $4
million each year, depending on the types of cases. The total for
this year is higher than average. The variances are circumstantial.
10:00:10 AM
Senator Dyson surmised that because the actual amounts are
difficult to predict, payment of judgments and claims are made
through supplemental appropriations.
10:00:23 AM
Senator Dyson directed attention to Robert Vacolas v. State of
Alaska, et al. The plaintiff in this case had approached him with
information about problems within the Division of Child Protective
Services. A subsequent audit of the Division identified multiple
problems and validated many concerns. Despite Senator Dyson's
efforts to ensure the anonymity of this whistle blower, including
requests to the Office of the Governor, the employee was identified
and his employment was terminated. The employee filed suit and
prevailed. This "sends a message" to potential whistle blowers that
their anonymity could not be guaranteed and that repercussion could
occur.
Senator Dyson requested the amount of this judgment be reduced from
the budgets of the Department of Health and Social Services or the
Office of the Governor. Almost no other action of the Murkowski
Administration has offended him more than the events of this
situation.
10:02:43 AM
Co-Chair Wilken shared initial calculations of the amount of
interest versus earnings on the amount of this item.
10:02:58 AM
Senator Stedman stated that the "spread" between the two figures
would be more accurate to determine whether payment should be made
early.
10:03:18 AM
Co-Chair Wilken noted the accrued interest would increase if the
appropriation were made later.
10:03:26 AM
Senator Hoffman referenced Jane Doe 1; Jane Doe 2; and Jane Doe 3
v. Daniel Scott and Department of Public Safety, and Jane Does 1
and 2 v. Department of Public Safety and Daniel Scott, pertaining
to criminal sexual assault and kidnapping charges against an Alaska
State Trooper stationed in Aniak. Senator Hoffman asked why two
different cases were filed.
10:03:49 AM
Ms. Daughhetee responded that the cases involved different
plaintiffs. Two different women were kidnapped and assaulted by
this trooper.
10:04:09 AM
Senator Hoffman asked what lessons the Department of Public Safety
has learned from this experience and how recruiting and hiring
practices have changed to avoid another occurrence.
10:04:26 AM
Ms. Daughhetee responded that no action has been taken.
10:04:39 AM
Mr. Tillery furthered that prevention of this type of crime could
not be addressed by change of procedure. No structural changes were
recommended, although the Department of Public Safety is "being
careful and alert" to possible risks. This situation was not an
accident or incident in which prevention "fell through the cracks".
10:05:20 AM
Department of Natural Resources
10:06:01 AM
Section: 6(a)-(c)
RDU: Parks Management
RDU: State Historic Preservation Program
RDU: Parks Management
RDU: Parks and Recreation Access
Supplemental Need: Parks revenue collection shortfall. Need by
March 31, 2006 to maintain the planned service levels. Change
structure to put Parks components into Resource RDU to help
maintain the planned service levels in State Parks.
$350,000 General Funds
($350,000) Receipt Supported Services
NICO BUS, Acting Director, Division of Support Services, Department
of Natural Resources, testified that the shortfall occurred in the
first six months of the fiscal year and was realized in the fall of
2005. Immediate action was taken to reduce expenditures and "live
within the budget". This funding is necessary to avoid significant
reduction in park services. Similar action was taken in FY 03. The
intent is to keep all State parks operating to the extent possible.
Projecting the amount of Receipt Supported Services that would be
generated each year is difficult. This request would allow
Department funding that would otherwise lapse, to be allocated to
the park system thus avoiding reductions during the tourism season.
10:09:44 AM
Co-Chair Wilken applauded the collection of more user fees. He
questioned the need for funding at this time, noting park usage is
not high. He asked why the appropriation could not wait until the
FY 07 regular budget funds were released.
10:10:20 AM
Mr. Bus responded that seasonal staff were in layoff status and
would be called to return to duty in March. If the funding were not
provided by then, the Department would be required to take measures
to stay within the budget, and those positions would not be filled
at the scheduled time. A timely appropriation would provide
assurance.
10:11:14 AM
Mr. Bus pointed out the multiple line items for this request are
technical and provide for the funding transfer.
10:11:46 AM
JERRY LEWANSKI, Director, Division of Parks and Outdoor Recreation,
Department of Natural Resources, testified via teleconference from
Anchorage to the number of measures taken to reduce expenditures.
All activities except emergency spending were ceased. This funding
is necessary immediately to allow for the hiring and rehiring of
seasonal workers to prepare the parks for opening and to begin
collection of user fees. Collection of fees over the winter has
been slow due to snowfall and other factors. The placement of the
seasonal workers would result in increased fee collection.
10:13:19 AM
Department of Revenue
Section: 8
RDU: APFC Operations
Supplemental Need: Gasline Investment Determination Costs
$550,000 Permanent Fund Corporate Receipts
BOB BARTHELOW, Chief Operating Officer, Alaska Permanent Fund
Corporation, Department of Revenue, testified that this funding
authority would allow staff to perform a due diligence analysis to
identify the risks and benefits of an investment in the proposed
natural gas pipeline. Past operating budgets have including funding
for this effort. If the Corporation makes an investment in this
venture, there would be no cost to the operating budget. The
Corporation is currently considering a separate real estate
investment and if the decision were made to make that investment,
funding would be available for this analysis. Otherwise the
Corporation would have exceeded the $300,000 authorized for pre-
investment expenditures.
Mr. Bartholomew stated this request is included in the fast track
supplemental legislation to begin an investigation into a possible
investment in the proposed natural gas pipeline. An advisor would
be hired to assist in the analysis, although the Corporation is
hesitant to enter into a contract before it has authority to make
the expenditure.
10:16:23 AM
Co-Chair Wilken asked how long the analysis process would require.
10:16:29 AM
Mr. Bartholomew expected the analysis would be undertaken as a two-
step project. The first portion would occur before an agreement was
made between producers and the State. The Corporation has little
experience with capital infrastructure investments, although this
has been an increasing investment class worldwide. The second
portion of the project would be specific to a proposed natural gas
pipeline. Some of this analysis could be undertaken before a
contract was negotiated and announced, but the details of the
project must be known before a full investigation could be done.
Most of the work would be done during the next year. The total cost
of the analysis would exceed $550,000 and funding authority would
be requested for costs to be incurred in FY 07.
10:18:34 AM
Senator Stedman asserted that all Alaskans support construction of
a natural gas pipeline sooner rather than later, however, income
would not be realized for many years. A contract or an agreement
has not been negotiated with producers and the allocation of
$550,000 for this analysis in the fast track supplemental would be
premature. The regular FY 07 capital and operating budgets would be
finalized in three months. The contract would not be for
construction of the pipeline, but rather would stipulate how the
project would proceed. Public debate must occur before decisions
were made.
Senator Stedman supported the consideration of an investment in the
proposed natural gas pipeline by the Corporation.
10:20:44 AM
Co-Chair Wilken asked if the first step of the proposed analysis,
the viability of the Corporation investing in capital
infrastructure, could be undertaken separately with the second step
considered later.
10:21:03 AM
Mr. Bartholomew replied that receiving education and performing
analysis to determine whether infrastructure investment would be
appropriate for the Fund portfolio would be beneficial regardless
of the proposed pipeline project. He agreed the timing of the
contract was unknown. The intent of the Corporation's executive
director is to be as prepared as possible. The information would be
gathered and made available to the public, which could add to the
discussion about whether the Corporation should invest in a natural
gas pipeline.
10:23:42 AM
Senator Stedman anticipated discussions would occur. If the State
held an interest in the pipeline, the options for such investment
could be made from the general fund, the Permanent Fund
Corporation, the Earnings Reserve account or other options.
10:24:46 AM
Senator Stedman noted the many expenditures made in the analysis of
the proposed pipeline. He cautioned about too many expenditures.
10:25:12 AM
Senator Olson pointed out that studies have already been conducted
to determine whether the State should invest in the proposed
natural gas pipeline. He asked what additional determinations would
be expected from this analysis.
10:25:43 AM
Mr. Bartholomew affirmed that the Department of Revenue has
contracted with a team of three advisors to review various
scenarios of funding the proposed pipeline. The Corporation would
leverage or benefit from the work already done. The first objective
of the Corporation's effort is to determine whether capital
infrastructure investments would be appropriate for the Fund. This
decision could not be made solely from the Department of Revenue's
analysis.
Mr. Bartholomew stressed that the Corporation's advisor, Callan and
Associates, has a firm policy to not perform analysis on a specific
project. Therefore the first step would be to do a general analysis
with Callan and Associates. The second step to determine whether
the Corporation should invest in the proposed natural gas pipeline
would utilize the Department's advisor. The intent is to rely on
the State's efforts the extent possible.
10:28:08 AM
Department of Transportation and Public Facilities
Section: 9(a)
RDU: Capital - Highways and Aviation
Supplemental Need: Whittier Tunnel portal jet fan replacement
due to catastrophic failure of the #2 portal jet fan. Jet fans
are necessary to operate the Whittier Tunnel as they force the
carbon monoxide gases out of the tunnel. There are two fans at
each end of the tunnel - one is for normal use and the other
is required backup during repair or failure of the other.
Without this second fan, the tunnel must be closed to
accommodate any maintenance of the remaining fan.
$504,200 General Funds
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation and Public Facilities, outlined the
need for the backup fan. The fan should be installed for the
upcoming busy spring and summer seasons.
10:29:51 AM
Senator Bunde asked the cost per hour to operate this tunnel.
10:30:02 AM
Ms. Slagle replied that the hourly cost has been calculated for
certain commercial operations.
10:30:25 AM
Senator Bunde noted that residents of Whittier have requested the
tunnel be opened an additional two hours each day at an additional
cost.
10:30:59 AM
Section: 9(b)
RDU: Capital - Airport Improvement Program Appropriation
Supplemental Need: The Airport Improvement Program
appropriation will increase by $15,100,000 from $470,150,100
to $485,250,100 because of the increases in the allocations
listed below: [9(c) and (d)]
Section: 9(c)
RDU: Capital - Airport Improvement Program Allocation
Supplemental Need: Amended: Cordova: Airport Runway Safety
Area Expansion
$3,000,000 Federal funds
Ms. Slagle informed that the Department had received authority for
some federal funding for this project before the State's FY 06
budget was passed. Since then, an additional federal grant was
awarded. The changes to this project will prevent the need to
significantly extend the runway length and the Federal Aviation
Administration (FAA) supports this. The funding authority is
necessary immediately to prepare for this project, as runway work
could not be undertaken during the fishing season of May and June.
The intent is to complete construction in July.
10:32:53 AM
Senator Olson asked if the runway was located on the outskirts of
the town.
10:33:06 AM
Ms. Slagle understood this to be so.
10:33:12 AM
Section: 9(d)
RDU: Capital - Airport Improvement Program Allocation
Supplemental Need: New: Unalakleet: Airport Paving
$12,100,000 Federal Funds
Ms. Slagle noted that this request was originally included in the
Governor's FY 07 proposed capital budget. It has been learned that
the project could be undertaken during the current year. The
airport was originally paved by the military and a resin product
has been applied to reduce dust. The dust has become hazardous and
is damaging to aircraft. Northern Air Cargo has discontinued flying
to this airport because of the problems.
10:34:22 AM
Senator Bunde asked if the runway was standalone.
10:34:31 AM
Ms. Slagle responded that the airport consists of a runway, a
taxiway and other facilities.
10:34:38 AM
Section: 9(e)
RDU: Capital - Surface Transportation Program Appropriation
Supplemental Need: The Surface Transportation Program
appropriation will increase by $15,000,000 from $373,604,700
to $388,604,700 because of the increase to the allocation
listed below: [9(f)]
Co-Chair Wilken noted this line item indicates an increase of
funding for the Statewide Transportation Improvement Program
(STIP).
10:34:54 AM
Section: 9(f)
RDU: Capital - Surface Transportation Program Allocation
Supplemental Need: Amended: National Highway System (NHS) and
Non-NHS Pavement and Bridge Refurbishment
$15,000,000 Federal Funds
Ms. Slagle stated this funding would be utilized for additional
projects that have been identified and could be undertaken this
spring. The intent is to secure contracts. This is a preventative
program to extend the useful life of roadways. Specific projects
include crack sealing, drainage, signage, guardrails, illumination,
bridgework and rehabilitation, drain cleaning, seismic retrofits
and painting. Some of these projects would be located near Homer,
Diamond Ridge, Palmer, the Tok Cutoff Highway mileposts 44 to 94,
Steese Highway Expressway and the Richardson Highway.
10:37:11 AM
Co-Chair Green asked if State matching funds were required to
secure the federal appropriation.
10:37:18 AM
Ms. Slagle replied that the match requirement for these projects is
less than ten percent and that the funding is available.
10:37:39 AM
Amendment: DOT A 2/06/06
RDU: Capital - Airport Improvement Program Appropriation
Supplemental Need: The Airport Improvement Program
appropriation will increase by $1,500,000 from $485,250,100 to
$486,750,100 because of the increase in the allocation listed
below:
RDU: Capital - Airport Improvement Program Allocation
Supplemental Need: Amended: Kotzebue: Sand Building
Early approval of this project will allow a contact to be
awarded in April 2006. Then there will be time for the
contractor to order, obtain and barge the materials before
freeze up in 2006 to avoid losing a season of construction
time.
$1,500,000 Federal Funds
Ms. Slagle explained that the airport improvement project at Nome
was anticipated for completion this year. However, damage occurred
and the paving could not be undertaken until the following year.
The Department intends to transfer the funding for replacement of
the sand building located in Kotzebue. The building is actually a
shed. The walls are bulging from years of containing sand. This is
a high priority for the maintenance of the Kotzebue airport
facility.
10:39:26 AM
Senator Olson affirmed this project is needed. An aircraft had slid
off the runway because it was inadequately sanded.
10:39:55 AM
Presentation of the funding requests included in this legislation
was concluded.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:40:25 AM
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