Legislature(1993 - 1994)
04/16/1993 09:30 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 16, 1993 9:30 a.m. TAPES SFC-93, #61, Side 1 (000-end) SFC-93, #61, Side 2 (575-end) SFC-93, #63, Side 1 (000-124) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:30 a.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kerttula, Kelly, and Sharp were present. Senators Jacko and Rieger arrived as the meeting was in progress. ALSO ATTENDING: Attorney General Charlie Cole; John Sandor, Commissioner, Dept. of Environmental Conservation; Bruce Campbell, Commissioner, Dept. of Transportation and Public Facilities; Craig Tillery, Assistant Attorney General, Dept. of Law; Shelby Stastny, Director, Office of Management and Budget; Ron Lind, Director, Administrative Services, Dept. of Transportation and Public Facilities; Dugan Petty, Director, Division of General Services, Dept. of Administration; Ron Sommerville, Special Assistant, Dept. of Fish and Game; David Teal, Director, Administrative Services, Dept. of Labor; Karen Rehfeld, fiscal analyst, Legislative Finance Division; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 50 - FY 94 CAPITAL BUDGET Discussion was had with representatives of the following agencies regarding additional amendments to the Governor's capital budget: Office of Management and Budget Dept. of Fish & Game Dept. of Labor Dept. of Administration Dept. of Transportation & Public Facilities SB 87 - EXTEND ALASKA PUBLIC UTILITIES COMMISSION The bill was REPORTED OUT of committee with a zero fiscal note from the Dept. of Commerce and Economic Development. SB 165 - APPROP: ALYESKA SETTLEMENT/FY 93 SUPPLMNT Teleconferenced discussion was had on both SB 165 and SB 183. Both bills were subsequently HELD in committee for further review. SB 183 - APPRO: EXXON VALDEZ,CAPITAL BUDGET FY 94 Teleconferenced discussion was had on both SB 183 and SB 165. Both bills were HELD in committee for further discussion. SENATE BILL NO. 50 An Act making appropriations for capital projects; and providing for an effective date. (Cross reference to HCS CSSB 183 (Finance) which ultimately became the FY 94 Capital Budget.) Upon convening the meeting, Co-chair Pearce announced that the committee would first deal with additional capital budget amendments proposed by the Governor. She explained that the amendments represent additional agency requests that have not before had public hearings. SHELBY STASTNY, Director, Office of Management and Budget, first came before committee. He pointed to a listing of proposed amendments and noted that representatives of impacted departments were present to speak to the requests. DEPT. OF FISH AND GAME RON SOMMERVILLE, Special Assistant, Dept. of Fish and Game, came before committee. He explained that the $870.0 addition represents two years of funding for critical reauthorization of major legislation in Congress (the Magunson Fishery Conservation and Management Act, The Marine Mammal Protection Act, and the Endangered Species Act). Co- chair Pearce voiced her understanding that the annual total for the appropriation is $435.0. Mr. Sommerville concurred. DEPT. OF LABOR Mr. Stastny directed attention to the Dept. of Labor proposal to move $83.8 from the Worker' Compensation records automation program into claims handling system support and imaging consultant services. Co-chair Pearce called for questions. None were raised. DEPT. OF ADMINISTRATION Referencing amendments relating to the Dept. of Administration, Mr. Stastny said that he would speak to the Mt. Roberts Marina while DUGAN PETTY, Director, Administrative Services, Dept. of Administration, would discuss purchase of the Court Plaza building and expansion of office space at Sitka. Mr. Stastny explained that the Mt. Roberts Marina was added to the capital budget following meetings with Juneau city officials and the local legislative delegation. It is intended to provide an economic boost to the city in light of recent closure of the Greens Creek Mine. Local officials favored the marina while legislative representatives proposed expansion of the University. The marina was chosen for its potential for future economic activity via expanded ability to provide for larger commercial vessels. In response to a question from Co-chair Frank, Mr. Stastny advised that the match would be significant. Co-chair Frank asked if the proposed marina fits with the remainder of the capital budget. Are there other grants to municipalities for projects throughout the state? Mr. Stastny responded negatively aside from water, sewer, and school projects. Co-chair Frank voiced his understanding that the marina is an exception to the Governor's general policy. Mr. Stastny concurred. Dugan Petty next came before committee. He explained that the proposed purchase of the Court Plaza Building and expansion of office space at Sitka seeks to reduce lease costs. The Court Plaza request is for $5 million to purchase the ten-year-old, 36,000 square-foot building located adjacent to state properties. The $5.4 million purchase price is supported by appraisals. The department also seeks to make $612.0 in code compliance, ADA compliance, and other recommended maintenance improvements. An additional $317.0 will be needed for moving, build-out, and office furniture. The department believes it will save $600.0 and $700.0 annually in what would otherwise be outgoing lease expenses. The Sitka office space purchase seeks to buy a condominium interest in 1,914 square feet of office space now owned by the City of Sitka. Portions of the Dept. of Fish and Game and Dept. of Labor would be moved into the space. The purchase price is $275.0. The project would pay for itself within ten years. In response to a question from Co-chair Frank, Mr. Petty explained that both departments presently occupy space in the building. Staff is overcrowded and in desperate need of additional space. Discussion followed between Mr. Petty and Co-chair Frank concerning the background of the office building at Sitka. Discussion ensued between Mr. Petty and Senator Rieger regarding space in the Court Plaza Building now occupied by the Division of Elections and Ombudsman. Mr. Petty voiced his intent to leave the Alaska State Credit Union as the only non-state tenant in the building. The building would be filled by offices of the Dept. of Law (6,175 sq. ft.), Dept. of Corrections (10,000 sq. ft.), and Dept. of Military and Veterans' Affairs (2,440 sq. ft.). Responding to questions regarding code upgrades for the Court Plaza, Mr. Petty advised of a 1992 multidiscipline architectural/engineering inspection recommending that mechanical and electrical deficiencies be corrected. The study also identified some required maintenance. Discussion followed between Co-chair Frank and Mr. Petty regarding code compliance. Senator Rieger referenced the Sitka Office Building and raised questions concerning the cost of the purchase and the remaining useful life of the twenty-year-old building. Mr. Petty voiced his expectation that the useful life would be "30 more years." DEPT. OF TRANSPORTATION AND PUBLIC FACILITIES Co-chair Pearce inquired concerning newly appointed Commissioner Campbell's plans for ISTEA borough allocations. RON LIND, Director, Administrative Services, Dept. of Transportation and Public Facilities, said he could not say exactly what those plans might be. The new Commissioner looked at the program and feels implementation should be delayed because of many unanswered questions relating to engineering and the financial relationship with each borough. At this point, the Greater Anchorage Borough, because of its engineering capability and administrative activities plus the fact that it is an MPO under the Act, has the closest relationship to the borough plan described at previous meetings. For other boroughs, it is likely that engineering for FY 94 would have to be done by DOTPF. The new Commissioner is concerned that the department does not appear able to proceed with the earlier-described program by October 1, the start of the federal fiscal year. The department seeks to have all projects identified through the amendment process, the regular budget process, and the capital budget process left in place. Rather than providing separate appropriations for core and borough programs in each region, the department requests a central highway program for each region. That is the manner in which federal funds have been appropriated since 1987. Senator Kerttula voiced his discomfort with centralized funding for the Central Region, advising that the Mat-Su Borough is often left wanting in light of funding provided to Anchorage and Fairbanks. Co-chair Frank noted that while Anchorage has AMATS in place, the Fairbanks North Star Borough has no road powers nor planning and design capability. He attested to concern regarding plans by the former Commissioner for "a major diversion of funding away from the Northern Regions." The Norther Region covers areas from Valdez to the North Slope as well as Nome, Kotzebue, and Cordova. Co-chair Frank voiced relief that the new Commissioner intends to further review the plan. Senator Rieger directed attention to core highway programs and noted that the Governor's amendments evidence a 6.5% reduction in Central Region. Southeast shows a wash, but the Northern Region shows a 10% increase. He then inquired concerning the logic behind cutting the core program for Central while increasing it for the Northern Region. Senator Rieger noted that the proposed ISTEA allocation was promoted as regionally equitable. It now appears that LBA approval of a $6 million RPL is causing a shift in total highway funds statewide. Mr. Lind explained that the increase in Northern Region (preliminary engineering, right of way, and utilities) has nothing to do with the fact the capital budget "went down because the Nome/Council project was removed." Review of available balances indicated that if the department is to have alternate projects available in the future, there must be authorization for preliminary engineering expenditures. Senator Rieger stressed that numerous Central Region projects could have utilized the $3.5 million from the Kenai Spur Road. Instead, the funding appears to have gone to other parts of the state. Co-chair Frank pointed to confusion over the difference between appropriation of money and authorization of expenditures. The legislature authorizes projects, and the department then shifts the funding to where it can be spent. In past allocations, the Central Region has historically received 45%, the Northern Region (with 62% of the roads) has received 38%, Southeast 9.5%, the Marine Highway System 6%, and headquarters 1%. The legislature focuses upon authorization, and the department allocates approved funding. The legislature should instead focus on the issue of allocation to ensure that it is equitable. Discussion followed between members regarding authorizations versus allocations. Co-chair Pearce noted the arrival of Commissioner Campbell and inquired concerning the department plan for ISTEA funding. BRUCE CAMPBELL, Commissioner, Dept. of Transportation and Public Facilities, came before committee. He said he had chosen "to let this thing rest and get a hold of it later on and then be prepared next year." He acknowledged discussion of regional boundaries and boroughs and said that his oath as commissioner is to "look at the entire state transportation system." He acknowledged need for equity statewide but added that the driving force of a good transportation system is not confined by political boundaries. The commissioner referenced his tenure with the department in the 1960s and 70s and voiced his believe that he "did an excellent job of distributing the money and doing a good job statewide." He then voiced his intention to do the same during his present tenure. Commissioner Campbell termed the department proposal for the borough transportation system "a disaster ready to happen." With rare exception, boroughs are not ready to accept the funding, and the department is not ready to administer the project. The plan was thus stopped and proposed distribution delayed for a year. Commissioner Campbell advised that he had received no phone calls disagreeing with that decision. Funding for FY 94 will flow through the department's normal program. End, SFC-93, #61, Side 1 Begin, SFC-93, #61, Side 2 The Commissioner said that he could not say whether individual boroughs would receive the same funding as under the proposed ISTEA plan. The department will distribute the funding as fairly as possible, bearing in mind entire state transportation needs. Commissioner Campbell said he would be working on the borough transportation plan and methods of implementation. He cautioned that while the concept of a pass-through to boroughs is simple, implementation without losing federal dollars is very difficult. Senator Kerttula noted that second-class boroughs with no road powers rely upon the department for planning and design. That puts them in poor posture compared to boroughs with planning and design capability. The Senator noted a lack of projects for the MatSu area and called for equity. He advised that Fairbanks has approximately the same population as MatSu, yet it receives a much greater allocation. Commissioner Campbell acknowledged having heard similar sentiments from many other Senators and Representatives. Similar comments have also been expressed in the Governor's Office. The Commissioner noted that it has taken an extended period of time for the system to evolve to the present point. It will likewise take time to turn it around. Responding to a comment by Senator Kelly, Commissioner Campbell acknowledged that Anchorage, with a population of over 200,000 and the AMATS planning process in place, was ready to proceed with ISTEA. The decision to stop the distribution to boroughs should not affect Anchorage. Senator Kelly asked if the ISTEA money would be there, and Commissioner Campbell replied affirmatively. Senator Sharp voiced support for the Commissioner's decision to halt ISTEA distribution until the program is better defined. Commissioner Campbell reiterated that the plan was in the formative, idea stage. There were no provisions for implementation. He acknowledged that some boroughs do not have road powers and suggested that the department might have to develop a separate plan for each borough. Senator Rieger asked if the Commissioner would support inclusion of other projects from the six-year plan in the FY 94 capital budget. Commissioner Campbell explained that, in the past, the capital budget was not developed on a district-by-district basis because it is almost impossible to forecast when a particular project will come to construction. Design and construction are the easy parts of the task. Permits and environmental impact statements take considerable time and are not within department control. There is thus need for flexibility in project authorization to allow for the shifting of funding from a project that encounters problems to one that is construction ready. Without that flexibility, the state risks loss of federal funding. Senator Rieger noted that the Central Region has no design and construction money in the Governor's capital budget. He then suggested that it would be useful to have several projects available as alternates, if necessary. Commissioner Campbell said that he did not have sufficient detail to respond. Co-chair Frank voiced his understanding that Central Region is overauthorized by $30 million, and the Northern Region in underauthorized by a substantial amount. Co-chair Frank attested to need for a clearer understanding of how the department intends to proceed. Co-chair Pearce asked if the Commissioner could return to committee tomorrow morning with information explaining how the department intends to proceed on projects that have already been authorized as well as a description of where the department is in terms of planning for each region. Commissioner Campbell responded negatively, citing lack of adequate time to come fully up to speed on department activities after having been on the job only ten days. Co-chair Pearce advised that the committee must know what the department's general plan of action will be for moneys appropriated in the capital budget. Co-chair Frank concurred in need to know how much is available in outstanding authorization for each region as well as how the department intends to allocate funding in the FY 94 capital budget. Commissioner Campbell said he would ask department staff to prepare material for presentation to committee next Monday. In his closing remarks, Commissioner Campbell explained that ISTEA is simply the acronym for the present highway bill. It is not that different than previous bills over past years. It has some new provisions (specific categories for spending specific moneys on specific things), but it is generally along the same lines under which the department has always operated. Senator Kerttula voiced his understanding that several states (Idaho and Oregon) have successfully traded ISTEA moneys for general fund moneys for easier utilization by counties. He then suggested that that approach might be helpful to some boroughs. Commissioner Campbell acknowledged awareness of the arrangement, but said he was not knowledgeable of the specifics. Co-chair Pearce directed that the meeting be briefly recessed. RECESS - 10:20 A.M. RECONVENE - 10:30 A.M. SENATE BILL NO. 165 An Act making an appropriation to the Alyeska Settlement Fund and making appropriations from the Alyeska Settlement Fund; and providing for an effective date. SENATE BILL NO. 183 An Act making special appropriations for restoration projects relating to the Exxon Valdez oil spill and for oil spill response projects; and providing for an effective date. Upon reconvening the meeting, Co-chair Pearce directed that SB 165 and SB 183 be simultaneously brought on for discussion. She explained that both bills result from the EXXON VALDEZ oil spill. SB 183 funding for projects totalling $50 milliong will flow from settlement of the criminal case against Exxon. SB 165 appropriates moneys from a second settlement with strict agreement and consent decree requirements. TELECONFERENCE Co-chair Pearce acknowledged the presence of Attorney General CHARLIE COLE and CRAIG TILLERY, Assistant Attorney General, Dept. of Law, and noted a teleconference link to other areas of the state. She said that Attorney General Cole and Mr. Tillery would present an overview of projects within the legislation before the committee proceeds to the taking of public testimony. Speaking first to acquisition of former state park lands in Kachemak Bay, Attorney General Cole noted endeavors had been ongoing for nearly seventeen years. Approximately $7.5 million of the $900 million civil settlement from the EXXON VALDEZ oil spill will be applied toward the price of the lands. That funding was approved by both state and federal trustees. An additional $7.5 million will flow from the settlement between the state and Alyeska Pipeline Service Company. SB 183 contains the remaining $7 million appropriation, from the restoration fund, needed to comprise the $22 million purchase price. Attorney General Cole termed the purchase "the paramount project" sought by environmentalists and residents of the Kenai Peninsula. It is strongly supported by Governor Hickel. The Attorney General urged favorable consideration by committee. Mr. Cole explained that, as part of the $900 million settlement decree, the State of Alaska is to be reimbursed for moneys expended in damage assessment and cleanup. A like provisions requires that the federal government be similarly reimbursed. In each of the past two years, the state general fund received $29 million. The amount of each payment was agreed upon by the U.S. Department of Justice and the State of Alaska. The total amount of reimbursement expressly provided in the consent decrees is approximately $71 million. There are provisions, however, which allow the state to recoup additional moneys. The reason only $25 million and $24.5 million were respectively received by the state and the federal governments each year is because neither government wanted to unduly "delete" funds available for restoration. Future moneys expected as reimbursement in FY 94 have been applied to the Whittier Road Project. Mr. Cole stressed that under express conditions of the consent decree $50 million is to be used for restoration, rehabilitation, and enhancement of damaged resources and services. However, at the Governor's insistence, special provisions were included which enable that money to be used for "long-term environmental monitoring." Those moneys must be used for those purposes. In response to a request from Co-chair Frank, Attorney General Cole provided background information on settlement amounts and restrictions upon expenditures. He explained that under the Clean Water Act and other related federal statutes, moneys recovered from oil spills must be used by state and federal governments for restoration, rehabilitation, and enhancement of damaged resources and services. The state, in its claims against Exxon, proceeded jointly with the United States under that statute. It did so because of difficulties in segregating out whether the United States or the State of Alaska owned and had the right to recover for damaged resources, i.e., who held the right to recover for damage to sea otters, the water column, etc. Under the terms of the civil settlement with Exxon, the state is entitled to reimbursement for expenditures for cleanup and damage assessment. These moneys accrue to the state treasury, unfettered. Remaining moneys in the joint fund under this settlement must be used for restoration, enhancement, etc. The Attorney General reiterated that, up to this time, the state general fund has received $58 million. Future reimbursements should total $15 to $20 million. In response to a question from Co-chair Frank, Mr. Cole voiced his understanding that the $58 million has been expended. Co-chair Frank requested a recap of those expenditures. The Attorney General next referred to federal prosecution of criminal cases against Exxon Corporation and Exxon Shipping. He explained that after lengthy discussions surrounding the amount of the fine, an agreement was reached between Exxon and the U.S. Department of Justice for payment of $125 million as part of the criminal fine. Negotiations between the state and U.S. Department of Justice revolved around whether the state should share in that amount. The state took the position that since it had a claim for punitive damages against Exxon but was not prosecuting that claim, it should receive a portion of the fine. An agreement was reached whereby the state would receive $50 million from the federal criminal prosecution. The agreement requires that expenditure of the $50 million be limited to restoration purposes--the same limitation applied to use of civil settlement funds. The state recently settled with Alyeska Pipeline Service Company for miscellaneous economic claims that were not prosecuted against Exxon. Under the terms of that settlement, $6 million is to be used for construction of a road from downtown Cordova to a deep water dock site at Shepard Point. There is also $7 million each for construction of docks at Tatitlek and Chenaga, $7.5 million for the Kachemak Bay purchase, and $1.5 million to supplement fisheries business tax payments to municipalities. Senator Rieger inquired concerning who negotiated the $22 million purchase price for Kachemak Bay lands. Attorney General Cole indicated he had. As background information, he explained that when negotiations began, the Seldovia Native Association wanted considerably in excess of $22 million. The state took the position that any amount beyond $22 million would not be considered. Following that, lengthy discussions ensued between representatives of the nature conservancy and various interest groups, including those that held logging rights to the land. The $22 million figure was eventually struck. The Attorney General voiced his belief that the property could not be purchased for less than that amount. CRAIG TILLERY, Assistant Attorney General, came before committee to supplement remarks by Attorney General Cole. He acknowledged that $22 million represents the figure the state and other entities reached in previous years as a result of a number of appraisals. It reflects years of negotiations. Senator Rieger directed attention to funding for response and cleanup research, contained within Sec. 12 of SB 183. He noted language saying that the Dept. of Environmental Conservation would "work with the academic community, inventors, and industry to develop more effective technologies to deal with oil spills." The appropriation itself, however, speaks to contracts with private entities for "research programs and prevention, containment, etc." He then raised questions regarding differences in wording. Co-chair Pearce referred to an amendment proposed by Co- chair Frank and noted that some of the troublesome language would be deleted. Attorney General Cole referenced Sec. 4 of SB 183 and noted the $500.0 appropriation from the spill restoration fund for construction of the Kachemak Bay State Park visitor center. He acknowledged that construction of the center might not be the most appropriate use for the entire $500.0 and suggested that "and related facilities" be added to broaden the definition. End, SFC-93, #61, Side 2 Begin, SFC-93, #63, Side 1 JOHN SANDOR, Commissioner, Dept. of Environmental Conservation, came before committee in response to a question from Co-chair Frank. The Commissioner explained that the specific location of the center has not yet been determined. The Kachemak State Park citizens advisory board and the Division of Parks have been reviewing other capital projects, i.e. trails, access points, etc. A site for the center will be developed in cooperation with the advisory board. The Commissioner presented a listing of proposed projects and associated amounts that he acknowledged could utilize the entire $500.0. The intent, however, is to place the visitor center as the highest priority. Co-chair Frank voiced his belief that if the state is spending $22 million for a park, the visitor center should be analogous to that at Portage Lake or Denali Access rather than a public-use cabin in the wilderness that many people would not have an opportunity to use. Co-chair Pearce advised of a three-hour teleconference window for further discussion of SB 165 and 183, later in the day. SENATE BILL NO. 87 An Act extending the termination date of the Alaska Public Utilities Commission to June 30, 1994. Co-chair Pearce directed that SB 87 be brought on for discussion. Senator Rieger MOVED that SB 87 pass from committee with individual recommendations. No objection having been raised, SB 87 was REPORTED OUT of committee with a zero fiscal note from the Dept. of Commerce and Economic Development. Co-chairs Pearce and Frank and Senators Kerttula and Rieger signed the committee report with a "do pass" recommendation. Senator Jacko signed "no recommendation." Senator Sharp signed "Do not pass." ADJOURNMENT The meeting was adjourned at approximately 11:00 a.m.