Legislature(1993 - 1994)
02/17/1993 09:00 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.