Legislature(1993 - 1994)
01/24/1994 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 January 24, 1994 9:00 a.m. TAPES SFC-94, #11, Side 1 (000-510) CALL TO ORDER Senator Steve Frank, Co-chair, convened the meeting at approximately 9:00 a.m. PRESENT In addition to Co-chairs Frank and Pearce, Senators Rieger, Sharp, Kerttula, and Jacko were present. Senator Kelly joined committee after the meeting was in progress. ALSO ATTENDING: Senator Mike Miller, Senator Robin Taylor; Randy Welker, Legislative Auditor, Legislative Audit Division; Nancy Slagle, Director, Division of Budget Review, Office of Management & Budget; Tracy Cramer, Budget Analyst, Office of Management & Budget; Mike Greany, Director, Legislative Finance Division; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 135: An Act making a special appropriation to the Department of Transportation and Public Facilities to determine the cost of acquiring real property within the right-of-way of the proposed extension of the Alaska Railroad from Eielson Air Force Base to the Alaska-Canada border; and providing for an effective date. Senator Mike Miller testified in support of SB 135. The committee voted to adopt amendment #1 by Senator Sharp. The appropriation bill CSSB 135 ($10.0) was REPORTED OUT of committee as amended. SB 160: An Act relating to memorial scholarship loans. Senator Robin Taylor testified in support of SB 160. SB 160 was REPORTED OUT of committee with individual recommendations with updated zero fiscal notes from the Department of Public Safety and the Department of Education. SB 243: An Act relating to the four dam pool transfer fund. Senator Robin Taylor and Randy Welker, Legislative Auditor testified in support of SB 243. The bill was HELD in committee for additional review. SB 246: An Act relating to reimbursable service agreements and other agreements between state agencies for the purchase of services. Randy Welker, Legislative Auditor, testified in support of SB 246. Nancy Slagle, Director, Division of Budget Review, Office of Management & Budget, and Tracy Cramer, Budget Analyst, Office of Management & Budget, voiced their concerns regarding SB 246. In addition, Mike Greany, Director, Legislative Finance Division, listed his concerns. The bill was HELD in committee for additional review. SENATE BILL NO. 135: An Act making a special appropriation to the Department of Transportation and Public Facilities to determine the cost of acquiring real property within the right-of-way of the proposed extension of the Alaska Railroad from Eielson Air Force Base to the Alaska-Canada border; and providing for an effective date. (Due to machine malfunction, this part of the meeting was not taped.) CO-CHAIR FRANK announced that SB 135 was before committee and invited Senator Mike Miller, sponsor of the bill, to join the committee at the table. SENATOR MIKE MILLER testified in support of SB 135. Discussion was held by Senators Jacko, and Miller regarding the possibility of a Canadian link with the proposed extension of the Alaska Railroad. In response to Co-chair Pearce's question of why the Alaska Railroad or Department of Natural Resources were not involved, Senator Miller said that Department of Transportation & Public Safety (DOT&PF) had originated the study. Again, in response to Senator Pearce, Senator Miller believed that DOT&PF could do this in house but it would probably be contracted out. (Minutes from this point reflect transcription of tape recorded portion of the meeting.) SENATOR SHARP MOVED for adoption of amendment #1. No objection being raised, amendment #1 was ADOPTED. Co-chair Frank pointed out that the fiscal note received from the Department of Transportation & Public Safety would not be moved with SB 135 since it is an appropriations bill. Senator Sharp MOVED that SB 135 as amended pass from committee with individual recommendations. No objections being raised, CSSB 135 was REPORTED OUT of committee. Co- chairs Pearce and Frank, Senators Rieger, Jacko and Sharp signed the committee report with a "do pass" recommendation. SENATE BILL NO. 160: An Act relating to memorial scholarship loans. Co-chair Frank directed that SB 160 be brought before the committee and invited Senator Taylor to speak to the bill. SENATOR ROBIN TAYLOR explained that SB 160 was introduced at the request of Kathleen Niles, admissions clerk at the University Alaska Southeast, Sitka. This bill would modify the eligibility requirements for the Alaska State Troopers under the Murphy scholarship fund to include this certificate in the program. He went on to explain the loan forgiveness if the graduate remains in Alaska and said that 63 percent of Sitka program graduates are employed in the state as law enforcement personnel. He pointed out the bill carried a zero fiscal note and had received a unanimous due pass recommendation from the Senate HESS committee. Co-chair Pearce MOVED that SB 135 pass from committee with individual recommendations. No objections being raised, SB 160 was REPORTED OUT of committee with zero fiscal notes from the Department of Education and the Department of Transportation & Public Safety. Co-chairs Pearce and Frank, Senators Rieger, Jacko and Sharp signed the committee report with a "do pass" recommendation. SENATE BILL NO. 243: An Act relating to the four dam pool transfer fund. Co-chair Frank directed that SB 243 be brought before the committee and invited Senator Taylor to speak to the bill. Senator Taylor said that SB 243 was introduced by Senate Rules Committee at the request of Legislative Budget & Audit after it approved a specific motion reaffirming the intent of the legislature to appropriate from the Four Dam Pool Transfer fund to the Southeast Energy Fund. He cited letters from the Department of Law and maintained that if the legislation retains current language, the needed fund transfer cannot be accomplished in the current fiscal year. Senator Sharp voiced his surprise at the overview from DC&RA showing a new general fund requirement for $525,000 to administer the electrical division. Discussion followed by Senators Rieger and Taylor whether SB 243 would address Senator Sharp's concern. Co-chair Frank invited Randy Welker, Legislative Auditor, to speak to SB 243. RANDY WELKER explained that when the Four Dam Pool Transfer Fund was established the language accompanying it directed sub-accounts for that money into the three different funds including the "subject to appropriation" language. The corresponding appropriations were then written directly out of the sub-funds and the appropriation link between the Transfer Fund and the sub- funds was inadvertently left out. He said that SB 243 is a technical amendment to accomplish the legislature's original intent and would not cause any inter-fund problems since all sub-accounts are within the general fund. Co-chair Frank asked for a flow chart prepared by Legislative Finance to be included in the members' files. Senator Sharp requested the Department of Community & Regional Affairs to give the committee an update on the new energy division. It was decided that on January 28, 1994 during the budget overview, the energy division would be reviewed. Senator Kerttula asked that Donald Harris from McGrath be invited to come before committee and speak to these issues. Co-chair Frank announced that SB 243 would be HELD in committee. SENATE BILL NO. 246: An Act relating to reimbursable service agreements and other agreements between state agencies for the purchase of services. Co-chair Frank directed that SB 246 be brought before the committee and invited Randy Welker, Legislative Auditor, to speak to the bill. Randy Welker said that SB 246 dealt with RSAs (reimbursable service agreements). The primary impetus for this legislation was an auditor's report released last interim on the commissioner's office in the Department of Health & Social Services. The audit objected to the manner in which the commissioner's office was using RSAs to bring money into the commissioner's office appropriation increasing the level of expenditure authority for the Commissioner after the legislature and Governor had established a lower expenditure authority amount. He did not want to apply that all RSAs were troublesome or invalid but felt this legislation will provide some clarification in statute. He did not believe it would add any additional requirements that do not exist in the system at present. It provides focus and emphasis from the legislature on the appropriate use of RSAs. He said the statute as amended would state that an RSA could not be used to transfer money between appropriations and provides several rules for the use of RSAs. First, it would require legal authority to request the service requested, secondly, legal authority to provide the service requested, and finally, when that service has been provided, the billing for the service is based on an actual cost of the service provided. Co-chair Frank asked if the service had to be provided. Mr. Welker answered that unless a service has been provided, there is no executed agreement, and no basis for billing. In answer to Senator Rieger's question whether LB&A routinely peruses RSAs, Mr. Welker said that they did not go out of the way but staff is aware of the potential for abuse or misuse of RSAs. In answer to another question by Senator Rieger, Mr. Welker reiterated that SB 246 will help clarify what the legislature believes to be the legitimate use of RSAs. Senator Jacko asked if OM&B had a position statement available. Co-chair Frank invited Nancy Slagle, Director, Division of Budget Review, Office of Management & Budget, and Tracy Cramer, Budget Analyst, Office of Management & Budget to join the committee at the table. NANCY SLAGLE explained that until the mid-80s there were such statutory requirements in the purchasing area of the statutes. The administration feared that under SB 246 instances may occur where there may be the lack of statutory authority but some expertise may be needed to be purchased from another agency. Another area of concern is if the legislature in their budget process decided to put money into a certain component for accountability purposes and approved the transfer of those funds to other components to provide the services, it may be questionable under SB 246 whether there is an actual contractual arrangement between those components. In answer to Senator Rieger, Ms. Slagle replied that a written agreement has historically been used as a contractual agreement between agencies. The only problem would be if the money is placed in a particular component but the services are not provided in that component but provided elsewhere. She said that OM&B provides written procedures for RSAs to the agencies. It provides not only the procedures but oversight for those RSA agreements. She assured the committee that the department is very careful about what it approves and disapproves. Senator Sharp asked if OM&B had the authority to prohibit RSAs between divisions or sections within a department. Ms. Slagle answered that OM&B was able to oversee all RSAs between divisions or departments. Senator Rieger wanted to know if there was a technical definition of agency and if an agency could move appropriations within an agency. Ms. Slagle believed there was a definition of agency but would provide that information to the committee. Co-chair Frank requested OM&B, Randy Welker and Mike Greany to propose a mutually agreed upon amendment that would not unduly restrict but eliminate potential for abuse of RSAs. Mike Greany cautioned the committee that any amendment made should not effect the legislature's ability to build in transfers within the budgeting process. Co-chair Frank announced that SB 246 would be HELD in committee. ADJOURNMENT The meeting was adjourned at approximately 10:00 a.m.