Legislature(1993 - 1994)

02/17/1993 09:00 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                        February 17, 1993                                      
                            9:00 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-93, #27, Side 2 (558-end)                                                
  SFC-93, #29, Side 1 (000-304)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Steve  Frank,  Co-chair,  convened  the  meeting  at                 
  approximately 9:00 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chairman Frank, Senators Kelly,  Kerttula,                 
  Sharp  and Jacko were present.   Senator Rieger arrived soon                 
  after the meeting began.  Co-chair  Pearce arrived as it was                 
  in progress.                                                                 
                                                                               
  ALSO  ATTENDING:  Darrel  Rexwinkel, Commissioner,  Dept. of                 
  Revenue;  Rod  Mourant,  Assistant  Commissioner,  Dept.  of                 
  Revenue; Cheryl Frasca, Director, Division of Budget Review,                 
  Office  of  Management  and Budget;  Gary  Bader,  Director,                 
  Administrative Services,  Dept. of Education;  Janet Clarke,                 
  Director,  Division  of  Administrative  Services, Dept.  of                 
  Health & Social Services; Jan  Hansen, Director, Division of                 
  Public Assistance, Dept. of Health and Social Services; Nico                 
  Bus, Chief, Financial Services,  Dept. of Natural Resources;                 
  John  Cramer, Director,  Division  of Agriculture,  Dept. of                 
  Natural Resources;  Dave Kelleyhouse, Director,  Division of                 
  Wildlife Conservation,  Dept. of  Fish and  Game; Alicia  D.                 
  Porter, Alaska Environmental  Lobby; Doug  and Opal  Welton;                 
  Teresa  Sager-Stancliff, aide  to Senator  Mike  Miller; and                 
  aides  to  committee  members  and   other  members  of  the                 
  legislature.                                                                 
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
                                                                               
  SB 46     -    Act authorizing moose farming.                                
                                                                               
                 Discussion  was  had  with staff  to  Senator                 
  Miller,             Dept. of Fish and Game, Dept. of Natural                 
                      Resources,  Alaska Environmental  Lobby,                 
                      Doug and Opal Welton.  The bill was then                 
                      HELD in committee for additional review.                 
                                                                               
  SB 100    -    Act   making    supplemental   and    special                 
  appropriations                for  the  expenses   of  state                 
                                government;  making, amending,                 
                                and   repealing  capital   and                 
                                                                               
                                                                               
                                operating  appropriations; and                 
                                providing  for   an  effective                 
                                date.                                          
                                                                               
                 Review  of   Secs.  1   through  34   of  the                 
                 supplemental was conducted by  Cheryl Frasca.                 
                 The bill was HELD in  committee for review of                 
                 the remaining sections.                                       
                                                                               
                                                                               
  SENATE BILL NO. 100                                                          
                                                                               
       An   Act   making    supplemental   and    special                      
       appropriations   for   the   expenses   of   state                      
       government;   making,   amending,   and  repealing                      
       capital   and   operating    appropriations;   and                      
       providing for an effective date.                                        
                                                                               
  Cross  Reference  -  Supplemental  Funding  for  FY  93  was                 
  ultimately                                                                   
                    incorporated within CCS SB 165.                            
                                                                               
                                                                               
  CONFERENCE CS FOR SENATE BILL NO. 165                                        
                                                                               
       An  Act  making an  appropriation  to  the Alyeska                      
       Settlement Fund and making appropriations from the                      
       Alyeska  Settlement  Fund;  making, amending,  and                      
       repealing  operating  and  capital appropriations;                      
       and providing for an effective date.                                    
                                                                               
  Co-chairman Frank  directed  attention  to  a  spread  sheet                 
  accompanying the bill and noted that the supplemental totals                 
  $40 million in general funds and  $8 million in other funds.                 
                                                                               
                                                                               
  CHERYL FRASCA,  Director, Division of  Budget Review, Office                 
  of  Management  and  Budget,  came  before committee.    She                 
  explained  that the  supplemental is considerably  less than                 
  recent years.   The administration attempted to  limit it to                 
  items beyond management control.                                             
                                                                               
  The $1,350,250 for  the longevity bonus program  reflects an                 
  increase in the number of applicants to the program.                         
                                                                               
  The $383,000 for the public  defender represents an increase                 
  in the number of cases presented for defense.  The agency is                 
  caseload  driven  with minimal  control  over the  number of                 
  clients it must serve.  In response to a subsequent question                 
  from Co-chair Frank, Ms. Frasca explained that last year the                 
  public defender agency received an unallocated reduction  of                 
  $570.0.    It  took   steps  to  consolidate  administrative                 
                                                                               
                                                                               
  functions with the  office of public advocacy and made other                 
  efforts  to  streamline  operations.    OMB  has  been  most                 
  supportive of that.  The agency is, however, caseload driven                 
  by  court  appointments  and has  little  discretion  in the                 
  number of cases assigned.  The agency has been traditionally                 
  underfunded.  A supplemental  is not uncommon.  The  same is                 
  true of the office of public advocacy.   The FY 94 budget is                 
  based  on  FY 93  funding  plus the  requested supplemental.                 
  Senator Kerttula spoke  to pressures placed upon  the agency                 
  by the judiciary.                                                            
                                                                               
  The $200,000 for  RATNET reflects  a savings the  department                 
  had hoped to  achieve by issuing  a competitive bid  request                 
  for uplink service.  The request for proposals was unable to                 
  be issued as  soon as intended.   The projected savings  was                 
  thus not  realized.   If the  funding is  not provided,  the                 
  department will  either shut down  the system  the last  two                 
  months of the fiscal year or severely cut back the number of                 
  broadcast hours.                                                             
                                                                               
  In  response to a  question from Co-chair  Frank, Ms. Frasca                 
  explained  that  an  $138,000 reduction  was  taken  in last                 
  year's budget for  RATNET based  on intent to  competitively                 
  bid  uplink  services  which  presently  cost  approximately                 
  $74,000 a month.  That amount  is currently paid to Alascom.                 
  Since the  bid has not  issued, projected  savings have  not                 
  been realized.                                                               
                                                                               
  Senator Rieger inquired regarding the difference between the                 
  $200,000 request  and the  $138,000 reduction.   Ms.  Frasca                 
  advised that she would have to  review the question with the                 
  department.                                                                  
                                                                               
  Senator  Kerttula inquired concerning the political share of                 
  uplink service.  Ms. Frasca said  that she would obtain that                 
  information and report back to committee.                                    
                                                                               
  Speaking to the $64,000 for  the personnel board, Ms. Frasca                 
  said that costs are associated with the  increased number of                 
  hearings  as a  result  of  complaints.   Funding  pays  for                 
  special counsel  and hearing officers.  Travel costs for the                 
  board and  support staff are  funded through the  budget for                 
  the division of  personnel.  It  is difficult to  anticipate                 
  how many  complaints will  be filed  in a  given year.   The                 
  supplemental request last year was $90,000.                                  
                                                                               
  Ms. Frasca further  explained that the personnel  board does                 
  not  handle  employee  grievances.    It deals  with  ethics                 
  complaints  concerning  the   Governor,  Lt.  Governor,   or                 
  attorney  general.    Three complaints  were  filed.   Costs                 
  associated  with  hearings  are  not  budgeted items.    The                 
  supplemental  request  is  based  on  need for  $24,000  for                 
  special  counsel in one case, $10,000  in another, a hearing                 
  officer for  $15,000, and anticipated special  counsel costs                 
                                                                               
                                                                               
  of $15,000.                                                                  
                                                                               
  The $616,400 for the office of public  advocacy results from                 
  the  fact  that the  agency,  like the  public  defender, is                 
  caseload   driven.     In  addition   to  consolidation   of                 
  administrative  functions, staff has taken leave without pay                 
  in an effort to contain costs.  Senator Sharp commented that                 
  agencies with "open  door policies" such as  public advocacy                 
  and  the public defender feel they have "an open door to the                 
  vault."  They have  no cost constraints upon who  they take,                 
  how they  screen them, etc.   He raised  questions regarding                 
  the qualifications of those  receiving these public services                 
  and  advised  that he  would  not support  the supplemental.                 
  Senator Kelly concurred in the latter comments.                              
                                                                               
  Senator Kerttula noted  that the  legislature wrote the  law                 
  enacting the agencies.   Senator  Kelly suggested that  they                 
  were formatted as a result of court decisions.                               
                                                                               
  Ms.  Frasca  noted that  the  administration has  introduced                 
  legislation  allowing  the  office  of  public  advocacy  to                 
  collect fees  for public  guardians  as well  as other  cost                 
  saving measures.                                                             
                                                                               
  The  $30,400  request  for  EPORS  results  from  three  new                 
  retirees  into the  system  and  increased health  insurance                 
  costs.  It is difficult to anticipate when elected officials                 
  will choose to retire.                                                       
                                                                               
  The  $642,900 for leasing  reflects last  year's legislative                 
  underfunding of $1 million.  The requested amount is  needed                 
  to  meet  lease  obligations for  the  current  fiscal year.                 
  Senator Kerttula inquired regarding attempts to gain control                 
  of state leasing.   Ms. Frasca pointed to E.O 87,  which she                 
  explained would consolidate  leasing activities  into a  new                 
  entity  within   the  Dept.  of  Transportation  and  Public                 
  Facilities.   Much  of the  emphasis will  be  management of                 
  currently leased space as well as planning for future needs.                 
                                                                               
                                                                               
  The  $400,000 supplemental for prosecution, within the Dept.                 
  of  Law, represents  an area  that received  a reduction  of                 
  $530,000  in FY  93.   In  response to  that  cut back,  the                 
  department laid off three prosecutors,  a paralegal, and two                 
  clerical  persons.   The Governor  does  not want  to absorb                 
  further reductions in  this area.  Co-chair  Frank suggested                 
  that  the  request  appears  to   be  an  exception  to  the                 
  supplemental  focus  on items  beyond  agency control.   Ms.                 
  Frasca said that the unallocated reduction taken at the  end                 
  of the legislative  session cut deeply into  the prosecution                 
  effort.  If  the supplemental is not  funded, deletions will                 
  have to be  made in other  areas of the  current budget,  or                 
  more serious reductions in prosecution will have to occur.                   
                                                                               
                                                                               
  The $6.6  million  in  general funds  and  $2.2  million  in                 
  permanent fund corporation  receipts for Dept. of  Law legal                 
  proceedings relating to oil and gas revenues  would bring FY                 
  93 funding  up to a total  of $18.4 million  compared to the                 
  $26.5  million spent  in  FY 92.    Senator Rieger  inquired                 
  concerning what constituted  need for the $18  million.  Ms.                 
  Frasca said she would ask that the  Dept. of Law put as much                 
  information  regarding   the  legislation  as   possible  in                 
  writing.  If additional information  is then needed, perhaps                 
  it  could  be  provided  to  members in  executive  session.                 
  Senator  Rieger  noted  need  for  extra  attention  to  the                 
  request.   Senator Kelly  requested a  list of  attorneys on                 
  contract as well as amounts they are being paid.  Ms. Frasca                 
  directed  attention  to  a  three-page memorandum  from  the                 
  Attorney General  detailing cases  involved in the  request.                 
  Senator Kerttula spoke  to expertise hired by  oil companies                 
  to dispute tax claims.                                                       
                                                                               
  In response to  a question from  Co-chair Frank, Ms.  Frasca                 
  advised that  $10.4 million for  oil and gas  litigation was                 
  included in the FY  94 budget.  Senator Kerttula  noted that                 
  the  House  substantially reduced  funding  for oil  and gas                 
  litigation last  year.  The  Senate added back  funding, but                 
  the conference committee  did not provide total  funding.  A                 
  shortfall was thus predictable.                                              
                                                                               
  Ms.  Frasca  acknowledged that  the  Dept. of  Law generally                 
  indicates what  total needs are likely  to be.  That  is not                 
  necessarily the amount  that is  proposed in the  Governor's                 
  budget.                                                                      
                                                                               
  The $280,000 to  the Dept. of Law for outside counsel in the                 
  telecommunications  joint  proceeding  before   the  Federal                 
  Communications Commission  and the  Alaska Public  Utilities                 
  Commission    reflects ongoing  litigation.   The  case will                 
  determine how  long distance  rates are apportioned  between                 
  carriers outside of  Alaska.  That decision  will ultimately                 
  influence rates within  the state.   John Katz  is the  lead                 
  person on the effort.                                                        
                                                                               
  The $35,000 supplemental relating to subsistence law, passed                 
  during the most recent special  session, stems from the fact                 
  that  when  the   legislation  was  passed,  there   was  no                 
  opportunity to enact fiscal notes since the operating budget                 
  had been completed in the regular session.  Costs associated                 
  with implementing the legislation were  incurred by both the                 
  Dept. of Law  and Dept. of Fish and  Game.  Senator Kerttula                 
  noted that recently passed law  merely redefined some areas,                 
  it did not  mandate a "whole  new approach to  subsistence."                 
  Co-chair Frank concurred.                                                    
                                                                               
  The $1,087,700  in judgments  and claims  against the  state                 
  reflects  a  $1   million  payment  to  plaintiffs   in  the                 
  reapportionment  lawsuit.  Some of that payment is on appeal                 
                                                                               
                                                                               
  to  the  Supreme Court.   There  is  also potential  that an                 
  additional $300,000 will have to be paid.  In  response to a                 
  question from Co-chair Frank, Ms. Frasca said  she would ask                 
  the department for a breakdown of the $1 million.                            
                                                                               
  Directing attention  to backup  for  the remaining  $87,700,                 
  Senator  Rieger  inquired regarding  the  difference between                 
  costs  and  fees.   Ms. Frasca  said  she would  provide the                 
  information.    Senator  Rieger  asked  for a  breakdown  of                 
  instances  in  which  the  state   pays  attorney  fees  for                 
  plaintiffs even though the plaintiffs lose the case.                         
                                                                               
  Senator Sharp suggested that court awards should be budgeted                 
  within the  court system  budget.   He then  noted that  the                 
  $87,000 relates to cases that have already been settled.  He                 
  then  questioned  the  advisability   of  appropriating  the                 
  requested $1 million while the award is on appeal.                           
                                                                               
  The $325,000 to the Dept. of Revenue for additional auditors                 
  in the  income and excise  tax division relates  to disputed                 
  tax cases.  Additional funding has been  included within the                 
  FY  94  budget.   The  Governor  will also  submit  a budget                 
  amendment for  this  item.   Requested supplemental  funding                 
  will jump start this intensive effort.                                       
                                                                               
  ROD MOURANT, Assistant Commissioner,  Dept. of Revenue, came                 
  before committee  in response  to a  question from  Co-chair                 
  Frank.  He explained  that the department had not  spent the                 
  requested  supplemental.   It has  made  preliminary contact                 
  with  the division of  personnel to determine  the status of                 
  registers and applications on file for individuals who might                 
  qualify for the four  vacant positions.  The department  has                 
  also commenced informal  inquiry in  the private sector  for                 
  availability of consultants  to assist  with research.   Mr.                 
  Mourant reiterated that no funds have been committed.                        
                                                                               
  Speaking to the  $6,427,100 for the  Dept. of Education  for                 
  increased K-12 enrollment under the public school foundation                 
  program,  Ms.  Frasca  acknowledged  that  the  amount could                 
  change  based on  February  reports  from school  districts.                 
  Discussion  between Senator  Kelly and Ms.  Frasca indicated                 
  that payment is based on  unaudited figures furnished to the                 
  department by  school districts.   Senator Kelly  questioned                 
  the validity  of the  numbers.   Ms. Frasca  said she  would                 
  contact  the department  regarding its  method of  verifying                 
  district  figures.   She  then  explained that  most  of the                 
  change contained within the February  count is the result of                 
  reclassifying  students.  Districts may have already counted                 
  them in one category and later  realized that they belong in                 
  special  education  programs.    These  districts  are  then                 
  entitled  to  additional  funding  because  of  the  special                 
  education classification.                                                    
                                                                               
  The $98,462 for the postsecondary education commission, WAMI                 
                                                                               
                                                                               
  medical program  represents an instance where the department                 
  incorrectly billed an August payment  for the program to the                 
  FY 93 appropriation rather  than FY 92.   Funding for FY  92                 
  thus  lapsed into  the general  fund.   As  a result  of the                 
  billing error, the program is short for FY 93.                               
                                                                               
  Speaking to Sec. 16,  Ms. Frasca explained that  it pertains                 
  to ratification  and amendment  of prior-year  expenditures.                 
  These items arose as a result of a statewide audit conducted                 
  by legislative audit.  The  audit identified instances where                 
  bills were paid, but  errors were made.  Some  errors result                 
  from  miscoding  of  the  account  number or  small  numeral                 
  differences.  Inclusion  within the supplemental  gets these                 
  items off the  books.  No new moneys will be spent to effect                 
  these corrections.                                                           
                                                                               
  End, SFC-93, #27, Sid 2                                                      
  Begin, SFC-93, #29, Side 1                                                   
                                                                               
  GARY BADER,  Director,  Administrative  Services,  Dept.  of                 
  Education, came  before committee  to explain  the need  for                 
  prior-year expenditures relating to  education.  He  advised                 
  that appropriations  for  which ratification  is sought  are                 
  generally eight years old.   Inability to correct accounting                 
  problems stems  from conversion  of the  old program  budget                 
  accounting  system  to the  new system.    In cases  where a                 
  charge was credited to the wrong  account code, funds in the                 
  correct  account  lapsed.    The  negative  balance  in  the                 
  incorrect account was  then carried  forward.  The  requests                 
  contained  within Sec. 16  represent an  effort to  clean up                 
  department books.                                                            
                                                                               
  Directing attention to  Sec. 17,  Ms. Frasca explained  that                 
  the $8,407,000  request for  cost-of-living adjustments  for                 
  aid  to  families with  dependent  children results  from an                 
  unanticipated caseload increase.  Legislation from last year                 
  that would have suspended COLA failed to pass, but the funds                 
  were  not   reinstated.    Co-chairman  Frank   requested  a                 
  breakdown  of  the  difference.    He  then  asked  how  the                 
  foregoing would dovetail with the department proposal to "do                 
  a  ratable  reduction."   Ms.  Frasca answered,  "That's not                 
  reflected here,  but we  also are  proposing to  suspend the                 
  COLA."                                                                       
                                                                               
  The  $1,671,100  in  Sec.  18  for adult  public  assistance                 
  represents caseload increases, 3% cost of living  allowance,                 
  and changes to interim assistance.  Ms. Frasca advised that,                 
  as  with AFDC, needed  legislation did  not pass  last year.                 
  The breakdown is  $434.0 for interim assistance,  $535.0 for                 
  COLA, and $700.0 for caseload increases.                                     
                                                                               
  Amendments  contained  within  Sec. 19  relate  to  MEDICAID                 
  facilities.  In this  instance, the rate of growth  was less                 
  than what was budgeted.  The department is thus able to make                 
                                                                               
                                                                               
  reductions.  Co-chairman Frank voiced his understanding that                 
  funding for MEDICAID was increased in the FY 94 budget.  Ms.                 
  Frasca concurred.  She explained that actual  numbers on the                 
  rate of  growth are not available until  February each year.                 
  The administration did not have the benefit of those figures                 
  when it prepared its FY 94 budget in December.  She said she                 
  would  check  with  the  department     concerning  possible                 
  decreases in the upcoming budget.                                            
                                                                               
  The  $265,300  requested  in  Sec.   20  relates  to  public                 
  assistance eligibility determination workers.  This need  is                 
  also caseload driven.  The intent is  to keep the error rate                 
  down so the  state is not  fined by the federal  government.                 
  OMB authorized the  department to  proceed in filling  eight                 
  positions to  keep up  with the  caseload.   Last year,  the                 
  legislature  approved  thirteen  new  positions.    However,                 
  because of the unallocated reduction taken at the end of the                 
  session, the department  was unable to  fill them.  When  an                 
  increasing error  rate became  apparent, OMB  authorized the                 
  filling of  eight positions.   The department must  also pay                 
  increased contractual costs for fee agents who "do this work                 
  out in  rural Alaska  as well  as food  stamp contracts  and                 
  other related costs due to increased caseloads."                             
                                                                               
  The  $390,000  set forth  in  Sec.  21 relates  to  the JOBS                 
  program.  It is also caseload driven and provides child care                 
  services  and other  support services to  welfare recipients                 
  engaged  in   education,  training,   or  other   employment                 
  activity.  Co-chairman Frank  voiced his understanding  that                 
  only 11% of  welfare recipients are eligible  to participate                 
  in  the program  and  that it  is  limited by  the  level of                 
  appropriation.                                                               
                                                                               
  JAN HANSEN, Director,  Division of Public  Assistance, Dept.                 
  of Health  & Social Services,  came before  committee.   She                 
  concurred  that only 15% of welfare recipients are served by                 
  the JOBS program.   Per federal requirement,  the department                 
  must  serve that percentage.  The request  in Sec. 21 is for                 
  associated  child care services.   A   higher  percentage of                 
  clients  than  expected require  day  care.   The department                 
  anticipated a  36% increase.   The actual increase  was 66%.                 
  This  piece of the program  is not part  of the federal cap.                 
  The child  care portion  is considered federal  entitlement.                 
  It is a 50/50 uncapped match.   Co-chairman Frank asked that                 
  Ms. Hansen submit the foregoing explanation in writing.                      
                                                                               
  The $348,00 in Sec. 22 pertains to increased data processing                 
  costs for  increased  public  assistance  claims.    Senator                 
  Rieger subsequently asked if similar Dept. of Administration                 
  data processing charges were impacting all agencies.  Cheryl                 
  Frasca said  that the  public assistance  claim is  the only                 
  supplemental request for a data processing charge back.                      
                                                                               
  JANET  CLARKE, Director,  Administrative Services,  Dept. of                 
                                                                               
                                                                               
  Health &  Social Services,  advised that  the above  request                 
  could be  unique in  that the  department had  only recently                 
  been  able  to  claim  federal   funds  in  its  charge-back                 
  methodology.                                                                 
                                                                               
  The  Sec.  23 request  for  $750,000 for  medical assistance                 
  claims processing results  from an increased number  of pre-                 
  admission screenings.   Last session a savings  was achieved                 
  by changing the standard length of in-patient stay routinely                 
  reimbursed by MEDICAID.  In the past, the length of stay was                 
  re-reviewed "after the seventy-fifth percentile."                            
                                                                               
  JANET CLARKE,  Director, Administrative  Services, Dept.  of                 
  Health &  Social Services, again came before committee.  She                 
  explained  that  last  year  a reduction  was  made  in  the                 
  MEDICAID formula portion  of the department budget.   Rather                 
  than  reviewing a ten-day hospital stay  on the seventh day,                 
  the  department now conducts  that review on  the fifth day.                 
  While that saved on the medical  formula side of the budget,                 
  it increased costs in  claims processing.  In response  to a                 
  question  from  Co-chairman  Frank,  Ms.  Clarke  agreed  to                 
  furnish information on formula savings.                                      
                                                                               
  The $1,100,000  in increased costs  for foster care  is also                 
  caseload  driven  and depends  upon  the number  of children                 
  placed in foster care.  The  Sec. 24 request includes $700.0                 
  the department hoped  to recover through SSI billings.   The                 
  department plans to  have a contractor complete  application                 
  for  foster care children.   The project got  off to a later                 
  start than anticipated.  The  department hopes to eventually                 
  replace these moneys with federal dollars.                                   
                                                                               
  In response to a question  from Co-chairman Frank concerning                 
  why the  project was  delayed, JANET  CLARKE explained  that                 
  national  contract   agencies  provide  a   service  listing                 
  children in  state custody  and arranging for  the state  to                 
  receive Social  Security on  their behalf.   The  department                 
  anticipated a  sole-source contract  with a  firm in  Oregon                 
  that provides similar services for that state.  The Dept. of                 
  Administration, however,  required a competitive bid.   That                 
  delayed the process.   Most of  the process is now  compete,                 
  and it appears  that the department  will be using the  same                 
  contractor  it would  have had  the  sole-source arrangement                 
  proceeded.                                                                   
                                                                               
  Senator Sharp  inquired regarding  disposition of  permanent                 
  fund dividends for  foster children.   Ms. Clarke  explained                 
  that the dividends are held  in trust accounts for  underage                 
  children.  When  they reach eighteen,  they are entitled  to                 
  receive the  moneys.  There  are also opportunities  for the                 
  children  to  access  the  funds while  they  are  in  state                 
  custody.  The state  applies for the dividends on  behalf of                 
  custodial  children.  Senator Sharp next  asked if the state                 
  could utilize the parents' permanent  fund dividends to help                 
                                                                               
                                                                               
  cover the cost of custodial care.   Ms. Clarke said that she                 
  would research that issue.                                                   
                                                                               
  The $110,000  in Sec.  25  for the  McLaughlin Youth  Center                 
  results  from increased  contractual  costs associated  with                 
  facility expansion  into  a  20-bed  treatment  cottage  and                 
  remodel of the detention unit.   Janet Clarke explained that                 
  the new cottage replaces an older facility.  It is not a new                 
  activity.  The  department did not anticipate it  would cost                 
  additional  moneys to  open the  new cottage.    There were,                 
  however, increases.   There were also utility  increases for                 
  the  entire  institution.   Co-chairman  Frank  requested  a                 
  breakdown of increased costs.                                                
                                                                               
  The Sec. 26 request of $229,600 for post mortem examinations                 
  results from an 11% increase in  the number of court-ordered                 
  autopsies  as opposed  to  the planned  15%  reduction.   In                 
  response to a  question from  Co-chairman Frank, Ms.  Clarke                 
  explained  that the  FY 94  budget calls  for  an additional                 
  reduction.  The  department's original plan was  to transfer                 
  this function back  to the court  system.  The court  system                 
  finds  that  unacceptable.   The  department  has  thus been                 
  working with  the courts  to develop  an  alternative.   The                 
  Governor's Office  will submit  a budget  amendment for  the                 
  program.  In  conjunction with  Health and Social  Services,                 
  Dept. of Public Safety, Dept. of  Law, and the Court System,                 
  the  administration  proposes  establishment  of  a  medical                 
  examiner system to control costs in  the future.  The effort                 
  has historically  been underfunded  by the  legislature.   A                 
  supplemental  has thus been  requested over the  past six or                 
  seven years.   The program could potentially  expand to cost                 
  "over  a million  dollars  in  the  future."    The  medical                 
  examiner model should contain and reduce costs.                              
                                                                               
  Discussion followed between Ms. Clarke and Co-chairman Frank                 
  regarding circumstances in which autopsies are now required.                 
                                                                               
  Ms. Clarke  explained that  over 500  post mortem  exams are                 
  performed each  year.   By statute,  the Dept.  of Health  &                 
  Social  Services must  pay the bill  while the  court system                 
  controls the number of court-ordered autopsies.  The program                 
  was  moved  to the  Dept.  of  Health &  Social  Services in                 
  1986/87  because of  problems in  administering  the program                 
  within the court system.  Autopsies are performed  through a                 
  contractual arrangement with a pathologist.                                  
                                                                               
  Further discussion  followed between Senator Rieger  and Ms.                 
  Clarke concerning  liability associated with  decisions made                 
  by the state coroner.                                                        
                                                                               
  Senator Sharp voiced his belief  that "the cost causer ought                 
  to be the  cost payer."   The agency ordering the  autopsies                 
  should also budget for them.                                                 
                                                                               
                                                                               
  The  Sec.  27 request  for  $155,900 for  implementation and                 
  citations  relating  to  the  bloodborne  pathogen   program                 
  includes $31,500 for a noncompliance  citation issued by the                 
  Dept. of Labor.  Janet Clarke voiced her understanding  that                 
  the Dept. of Labor also cited the Dept. of Corrections for a                 
  similar violation.   Federal regulations require  that state                 
  departments do a number  of things to protect  employees who                 
  may  come into contact with clients  who may have bloodborne                 
  illnesses.  There  must be a site-specific  exposure control                 
  plan,  employees   must  receive   three-part  hepatitis   B                 
  immunizations,  and   employees  are   to  receive   special                 
  training.  The department has over 1,000  employees at risk.                 
  The foregoing request will cover the  fine (in the event the                 
  department is  unable to come  to an understanding  with the                 
  Dept. of Labor), provide for training, etc.                                  
                                                                               
  When questioned  by Co-chairman Frank concerning  whether or                 
  not  the costs could have been anticipated, Ms. Clarke noted                 
  the  division   of  public   health  feeling   that  federal                 
  requirements  reflect  "a little  bit  of a  hysteria around                 
  bloodborne diseases."  The division questioned whether there                 
  really was a  public health risk.   Experts in  epidemiology                 
  attempted  to  work  with  the  federal  government  on  the                 
  regulations.   Despite those  efforts, the  regulations were                 
  implemented, and the state  is now at risk.   Both employees                 
  and union  representatives are  concerned.   The state  must                 
  comply with regulations enacted in July of 1992.                             
                                                                               
  In response  to questions  from Senator  Rieger, Ms.  Clarke                 
  said  that  there is  a  chance  the $31,000  fine  could be                 
  "applied to our  program, if our  plan is acceptable to  the                 
  Dept. of Labor."                                                             
                                                                               
  The  $196,300  appropriation  contained  in  Sec.  28  would                 
  provide the  Alaska  Seafood  Marketing  Institute  matching                 
  dollars for federal funds for oversees marketing.                            
                                                                               
  Sec. 29 is linked  to the Sec. 28  appropriation in that  it                 
  extends the  lapse  date on  the 1992  appropriation to  the                 
  Alaska  Seafood Marketing  Institute.   Cheryl Frasca  noted                 
  validated encumbrances  that  may  be  liquidated  based  on                 
  actual billings for advertising.  That would potentially fee                 
  $60,000 for application to the Sec. 28 match.                                
                                                                               
  In  response to a question from Co-chairman Frank asking why                 
  ASMI did not reduce general fund expenditures to capture the                 
  federal  funds  rather  than seek  a  supplemental  from the                 
  legislature, Miss Frasca explained that the request garnered                 
  approval by the administration because  the Governor felt it                 
  represented "a good  opportunity to take advantage  of these                 
  federal dollars."   It is  difficult for ASMI  to reallocate                 
  existing dollars to meet anticipated needs.                                  
                                                                               
  (Co-chair Pearce arrived at the meeting at this time.)                       
                                                                               
                                                                               
  The  $90,000 request  in  Sec. 30  for  the veterans'  death                 
  gratuity reflects the fact that  more applications have been                 
  received than the budget allows.  The individual payment  is                 
  $750.00.   Co-chairman Frank  voiced his  understanding that                 
  the  Dept.  of Military  and  Veterans' Affairs  proposes to                 
  eliminate the gratuity in FY 94.                                             
                                                                               
  The  $6,000,000 in Sec. 31 for fire suppression costs within                 
  the Dept. of Natural Resources is intended to cover possible                 
  spring fires and associated  costs to the end of  the fiscal                 
  year.  In  response to a  question from Senator Kelly,  Miss                 
  Frasca advised  that approximately  $3.6 of  the $6  million                 
  relates to fixed costs associated with fires.  Last year the                 
  legislature reduced the fixed cost request  to $1.9.  The FY                 
  94 budget  requests $4  million.   Co-chairman Frank  voiced                 
  need to focus on this funding at a later time.                               
                                                                               
  The  Sec.  32 request  for  $641,000  relates  to  the  land                 
  selection process  within the  Dept.  of Natural  Resources.                 
  The Governor made land selection a high priority in order to                 
  present state  selections to  the federal government  before                 
  the end of the year.  As a  result of moving staff into this                 
  project, the department has withdrawn  them from other work.                 
  Other appropriations could thus  not be billed for  the cost                 
  of these employees, and the land selection project  is short                 
  in ability to  cover its  costs.  Responding  to a  question                 
  from Co-chairman Frank  concerning savings  in other  areas,                 
  Miss Frasca  explained that  projects from  which staff  was                 
  withdrawn  will  eventually  proceed.   She  said  she would                 
  obtain additional information on the issue.                                  
                                                                               
  Senator  Rieger  raised  a question  regarding  the  cost of                 
  additional space requirements.   NICO BUS,  Chief, Financial                 
  Operations,  Dept.   of  Natural   Resources,  came   before                 
  committee.   He  explained that  in  order to  expedite land                 
  selection,  the  department had  to  "put on"  more  than 30                 
  employees.  The department rented an additional 3,000 square                 
  feet of space  in the Frontier  Building in Anchorage.   The                 
  cost was $3 per square foot.  Once the project is completed,                 
  the lease will be cancelled.                                                 
                                                                               
  In response to a question from  Senator Kelly concerning the                 
  year-end deadline for  the project,  Mr. Bus explained  that                 
  although  selection  was  made,  title   has  not  yet  been                 
  transferred.  A capital  project for FY 94 is  scheduled for                 
  work  with the  federal government  and native  corporations                 
  regarding actual  transfer.   The December  deadline was  to                 
  "lock in the  commitment from the  federal government."   If                 
  that had  not occurred,  the federal  government could  have                 
  designated selections.   Mr. Bus estimated that  the project                 
  would  conclude  within the  next two  years, at  which time                 
  ongoing work would become a regular operating budget item.                   
                                                                               
                                                                               
  Answering an additional inquiry  by Senator Rieger  relating                 
  to lease costs in Anchorage,  Mr. Bus noted that competition                 
  has   brought  costs   down  somewhat.     He   subsequently                 
  acknowledged  that  core  DNR  space  "is  one  of  the most                 
  expensive  leases  . .  . ."    The Dept.  of Administration                 
  negotiated the most recent lease.                                            
                                                                               
  Sec. 33 contains  a change in  the scope of  a 1989  capital                 
  project for  the  Challenge Alaska  Handicapped Ski  School.                 
  Miss  Frasca  acknowledged  administrative   discretion  for                 
  changes in scope.  However,  since the effort was originally                 
  a legislative project, the administration elected to include                 
  it  within the  supplemental.  The  change would  expand the                 
  scope beyond the original purpose  of relocating an existing                 
  facility and allow for design, engineering, and construction                 
  associated with building a new school.                                       
                                                                               
  Sec. 34 costs of $492,000  relate to Dept. of Fish and  Game                 
  implementation  of  the 1992  subsistence  law enacted  as a                 
  result of the most recent  special session.  The legislation                 
  contained  no  fiscal  note  since  budget funding  for  new                 
  legislation  had been  done during  the  regular legislative                 
  session.                                                                     
                                                                               
  End, SFC-29, Side 1                                                          
  Begin, SFC-29, Side 2                                                        
                                                                               
  Concerns were raised  by members  regarding actual need  for                 
  subsistence funding.   Cheryl Frasca said she  would provide                 
  additional budget information.                                               
                                                                               
  Co-chairman Frank advised  that additional review of  SB 100                 
  supplemental requests  would continue at the  next committee                 
  meeting.    He then  directed  that the  meeting  be briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 10:35 A.M.                                     
                     RECONVENE - 10:50 A.M.                                    
                                                                               
                                                                               
  SENATE BILL NO. 46                                                           
                                                                               
       Act authorizing moose farming.                                          
                                                                               
  Upon  reconvening  the meeting,  Co-chairman  Frank directed                 
  that SB 46 be brought on for discussion.                                     
                                                                               
  TERESA SAGER-STANCLIFF, aide  to Senator  Mike Miller,  came                 
  before committee.   She explained  that the bill  would give                 
  the Dept. of Fish  and Game authority to dispose  of surplus                 
  moose by  transferring them to private  ownership--either to                 
  individuals  or   groups  for  commercial,   scientific,  or                 
  educational purposes.   The legislation would  also legalize                 
                                                                               
                                                                               
  the sale of moose meat.                                                      
                                                                               
  DAVE    KELLYHOUSE,    Director,   Division    of   Wildlife                 
  Conservation,  Dept.  of  Fish and  Game,  next  came before                 
  committee, voicing department  opposition to  the bill.   He                 
  explained that, based  upon experience in  all jurisdictions                 
  previously providing for moose farming, the legislation will                 
  not likely result in  significant contributions to  Alaska's                 
  economy.  Further, it is likely to require significant state                 
  subsidies for  moose farming  ventures without  prospects of                 
  compensating  revenues.   Moose  farming  is also  likely to                 
  adversely impact Alaska's  wild game populations as  well as                 
  businesses presently benefitting from state wildlife.                        
                                                                               
  After over fifty years of  experience, moose have not proven                 
  to be  a viable  game farm  species for  either meat,  draft                 
  animal  purposes,  or  milk  production.    Of  two  farming                 
  operations  in the former  Soviet Union, one  has closed and                 
  the other has been converted to a wildlife research station.                 
  Those operations found that moose were subject to behavioral                 
  stress  and  related illnesses  in high  density situations.                 
  They were unsuitable for draft  purposes because they cannot                 
  rid themselves of body  heat.  Milk production was  low, and                 
  feeding proved  to be  exceedingly expensive.   The  type of                 
  fencing  required to  contain  a moose  costs  approximately                 
  $13,000 per mile.  It would thus cost  approximately $52,000                 
  to fence a square  mile of moose habitat.   Without adequate                 
  natural browse, moose must be provided supplemental hand-cut                 
  browse  or  a special  ration that  costs  twice as  much as                 
  domestic animal feed.                                                        
                                                                               
  Moose do not  do well in high  stocking rates.   Contrary to                 
  other  testimony,  they are  not  herd  animals.   They  are                 
  solitary  most  of the  time and  group only  during certain                 
  times of  the year.   Large acreages of  land are  needed to                 
  accommodate them.                                                            
                                                                               
  As  with other  agricultural endeavors,  an expensive  state                 
  subsidy is likely to be  necessary for single-use dedication                 
  of land, fencing, etc.                                                       
                                                                               
  The department believes  that, in terms of  land use, active                 
  management of wild  moose populations has proven  capable of                 
  producing equal or more productivity per dollar than private                 
  ownership.                                                                   
                                                                               
  Mr. Kellyhouse  questioned  assertions  that  moose  farming                 
  would   provide   viewing   opportunities    for   tourists.                 
  Department   experience   since  statehood   indicates  that                 
  roadside  zoos  result  "in a  high  number  of complaints."                 
  While  the department would  likely have little jurisdiction                 
  over private ownership, it would  nonetheless be expected to                 
  do something when  complaints arise.  The  department's zero                 
  fiscal  note assumes  that the  only department  involvement                 
                                                                               
                                                                               
  would be to "find  a surplus in coordination with  the board                 
  of  game  and then  inspect  facilities  to see  if  they're                 
  adequate."    In  reality,  the  department  would  probably                 
  experience  far  more  involvement.    As  an  example,  Mr.                 
  Kellyhouse noted  that the  department has  little authority                 
  over  the Delta  bison herd.   However,  when captive  bison                 
  escaped, the department devoted two man-months to "trying to                 
  get those animals back."  The effort was  unsuccessful since                 
  the  domesticated bison blended  with the wild  herd.  There                 
  would be more of a problem with moose.                                       
                                                                               
  A  further concern relates  to the "very  real potential for                 
  disease transmission and  introduction to  the wild."   Most                 
  game  farms  tend  to  have  a  variety of  stock  in  close                 
  proximity.    Moose  are  extremely  difficult  to  contain.                 
  During rut males  from outside the  enclosure are likely  to                 
  attempt to gain  access.  The  reverse is true for  confined                 
  males.   Escapes  are highly  likely  as is  transmission of                 
  disease.                                                                     
                                                                               
  ALICIA  D.  PORTER, Alaska  Environmental  Lobby,  next came                 
  before committee, voicing lobby opposition to the bill.  She                 
  said the legislation is considered biologically and fiscally                 
  detrimental to the state.  History has shown that game farms                 
  are labor intensive and economically draining.  Hidden costs                 
  relate to:                                                                   
                                                                               
       1.   Identifiable costs to the Dept. of Environmental                   
            Conservation, including:                                           
                                                                               
            A.   Examination of animals for disease                            
            B.   Inspection of meat for human consumption                      
            C.   Preparation of regulations                                    
                                                                               
       2.   Vulnerability of the Dept. of Public Safety to                     
            increased   enforcement   costs   resulting   from                 
  legalization                                                                 
            of  the sale  of  moose meat.    Poaching of  wild                 
            animals  frequently  becomes  a problem  in  areas                 
            where the  sale of game meat is  legalized.  After                 
            the  Province of  Alberta,  Canada, legalized  elk                 
            farming  and  the sale  of  elk  meat, enforcement                 
            costs skyrocketed due to increased poaching.                       
                                                                               
       3.   Dept. of Natural Resources need to permit land as                  
            agricultural.                                                      
                                                                               
       4.   Dept. of Fish and Game need for:                                   
                                                                               
            A.  Issuance of moose farm permits                                 
            B.  Inspection of fencing and other facilities                     
            C.  Surplus determinations                                         
            D.  Response to complaints from constituents and                   
                tourists when facilities appear to be                          
                                                                               
                                                                               
                substandard                                                    
            E.  Predator control                                               
                                                                               
  Ms. Porter noted  that many agricultural projects  in Alaska                 
  have failed to meet economic expectations and have turned to                 
  the state for subsidized, low-interest  loans.  The proposed                 
  bill  is  accompanied by  a zero  fiscal  note.   The Alaska                 
  Environmental  Lobby believes  that fiscal  notes  should be                 
  requested from DEC,  DNR, DPS and  DF&G.  Ms. Porter  voiced                 
  her  belief that  SB 46  would be  a costly venture  for the                 
  state to fund.                                                               
                                                                               
  OPAL  WELTON next  came before committee  in support  of the                 
  legislation.  She  presented written testimony on  behalf of                 
  herself and her husband, Doug.  (A copy of that testimony is                 
  appended  to  these  minutes and  is  also  on  file in  the                 
  original Senate Finance bill file for SB 46.)                                
                                                                               
  DOUG WELTON  next came  before committee  in support of  the                 
  bill.   He explained that  he and his  wife, Opal, have been                 
  working on moose  farming legislation  for over five  years.                 
  He took exception to  Dept. of Fish and Game  opposition and                 
  said that moose farming represents a conservation effort.                    
                                                                               
  Referring to Article VIII of the Natural Resource section of                 
  the state Constitution, Mr. Welton read the following:                       
                                                                               
       It is  the policy  of the  state to encourage  the                      
       settlement of its lands and the development of its                      
       resources by making them available for maximum use                      
       consistent with the public interest.                                    
                                                                               
  The response to  attempts to  educate the public  concerning                 
  moose  farming  has   been  overwhelming  support   for  the                 
  proposal.                                                                    
                                                                               
  Mr. Welton further noted constitutional language calling for                 
  legislative  provision  for  utilization,  development,  and                 
  conservation of  all natural resources,  including land  and                 
  waters.   The key  word is  "conservation."   He voiced  his                 
  belief  that  moose   farming  would  provide  a   means  of                 
  counteracting the hunting and killing of moose.                              
                                                                               
  Further constitutional  provisions relate to  reservation of                 
  fish, wildlife and waters in the natural state to the people                 
  of Alaska  for common use.   Residents of  the state  are to                 
  benefit from Alaskan  wildlife, not merely employees  of the                 
  Dept.  of Fish  and Game and  those who come  to Alaska from                 
  other countries and states to hunt and fish.                                 
                                                                               
  Mr.  Welton  noted  that  orphaned  animals are  often  sent                 
  outside  the  state to  zoos elsewhere.   He  suggested that                 
  Alaskans should have a prior claim  on this wildlife, and he                 
  took exception to references to  proposed moose farm efforts                 
                                                                               
                                                                               
  as "roadside  zoos."    He  made reference  to the  reindeer                 
  facility  at  the  University  of Alaska  and  musk  ox  and                 
  reindeer facility at Palmer and noted that  neither could be                 
  so classified.                                                               
                                                                               
  Mr.  Welton  again pointed  to  constitutional language  and                 
  advised  of  the requirement  that  fish,  forest, wildlife,                 
  grasslands, and all replenishable resources belonging to the                 
  state   be  utilized,  developed,   and  maintained  on  the                 
  sustained  yield  principle,  subject  to preferences  among                 
  beneficial uses.  There are  beneficial uses for moose aside                 
  from hunting.  It could provide a healthier, leaner red meat                 
  than the beef on the market today.                                           
                                                                               
  Constitutional language further  states that the legislature                 
  may  provide for facilities,  improvements, and  services to                 
  assure  greater  utilization, development,  reclamation, and                 
  settlement  of  lands  and to  assure  full  utilization and                 
  development of fisheries, wildlife, and  waters.  Mr. Welton                 
  again stressed that  full utilization should allow  for more                 
  than  merely  hunting.    Moose farming  would  not  have to                 
  escalate  into  large  commercial operations.    Small rural                 
  farms would provide  families with  fresh milk and  breeding                 
  stock  for  an ongoing  meat  supply.   The  legislature  is                 
  obligated to provide Alaskans with these opportunities.                      
                                                                               
  JOHN CRAMER,  Director, Division  of  Agriculture, Dept.  of                 
  Natural  Resources,  came  before  committee.     He  voiced                 
  department  support  for  the  legislation,  but  noted  his                 
  personal belief that a large-scale commercial  operation for                 
  meat production would probably not be economically feasible.                 
                                                                               
                                                                               
  Noting Dept. of Fish and Game opposition, Mr. Cramer said he                 
  was unaware of the basis for concerns regarding  a potential                 
  "significant state subsidy."                                                 
                                                                               
  Speaking  to the  likelihood  of  disease transmission,  Mr.                 
  Cramer  suggested that it  should be addressed  by the state                 
  veterinary rather than the Dept. of Fish and  Game.  He then                 
  suggested that the committee consult  with the veterinary in                 
  the course of further discussion of the bill.                                
                                                                               
  Mr. Cramer further advised that  lands already identified as                 
  agricultural  lands   could  be  utilized  for   moose  farm                 
  operations.   Farming efforts would  not necessarily  remove                 
  lands  from other  uses  and set  them  aside as  additional                 
  agricultural lands.                                                          
                                                                               
  Addressing comments by the  Alaska Environmental Lobby  that                 
  agriculture has failed, economically, in Alaska,  Mr. Cramer                 
  said, "There are successes in  every segment of agricultural                 
  industry in the  state of  Alaska, including game  farming."                 
  The Dept. of  Natural Resources and  Dept. of Fish and  Game                 
                                                                               
                                                                               
  could work together  on fencing requirements.   Current game                 
  farms are working.   There have been no releases  aside from                 
  the  Delta bison incident.   Regulations can  be written and                 
  enforced in such  a way that  a significant hazard for  wild                 
  populations would not be posed.                                              
                                                                               
  Co-chairman  Frank  voiced  his  understanding that  Senator                 
  Miller  is  working  with   the  administration  to   change                 
  definitions within the bill.  He then directed that the bill                 
  be HELD in committee pending those changes.                                  
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:00 a.m.                        
                                                                               

Document Name Date/Time Subjects