Legislature(1993 - 1994)

01/31/1994 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                        January 31, 1994                                       
                            9:10 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-94, #10, Side 1 (000-end)                                                
  SFC-94, #10, Side 2 (000-end)                                                
  SFC-94, #12, Side 1 (000-444)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-chairman   Steve   Frank   convened    the   meeting   at                 
  approximately 9:10 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chairman Frank, Senator Kelly was present.                 
  Co-chair  Pearce and  Senators  Kerttula,  Jacko, and  Sharp                 
  arrived soon after the meeting convened.  Senator Rieger did                 
  not attend.                                                                  
                                                                               
  ALSO  ATTENDING:    Senator  Randy  Phillips; Randy  Welker,                 
  Legislative  Auditor; Shelby  Stastny,  Director, Office  of                 
  Management and  Budget; Joe Swanson,  Director, Division  of                 
  Elections, Office  of the Lieutenant Governor;  Mike Nizich,                 
  Director, Division of Administrative Services, Office of the                 
  Governor;  Bruce  Geraghty,  Deputy  Commissioner, Dept.  of                 
  Community and Regional Affairs; Remond Henderson,  Director,                 
  Division of Administrative Services, Dept. of  Community and                 
  Regional   Affairs;   Pam   Stoops,    Executive   Director,                 
  Legislative   Affairs   Agency;   Mike   Greany,   Director,                 
  Legislative  Finance  Division;  Virginia   Stonkus,  fiscal                 
  analyst,  Legislative   Finance  Division;   and  aides   to                 
  committee members and other members of the legislature.                      
                                                                               
  ALSO ATTENDING  VIA  TELECONFERENCE FROM  ANCHORAGE:   Edgar                 
  Blatchford, Commissioner,  Dept. of  Community and  Regional                 
  Affairs; and  Robert Harris, Director,  Division of  Energy,                 
  Dept. of Community and Regional Affairs.                                     
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 243    -    FOUR DAM POOL TRANSFER FUND                                   
                                                                               
                 Discussion was  had with  Randy Welker,  Mike                 
                 Greany,  and Bruce  Geraghty.   The bill  was                 
                 subsequently HELD in  committee for  possible                 
                 amendment.                                                    
                                                                               
  SB 247    -    STATE LEASES & LEASE-PURCHASE FINANCING                       
                                                                               
                 No discussion.  Need for technical  amendment                 
                 was noted.   The bill  was HELD in  committee                 
                                                                               
                                                                               
                 for action at the next meeting.                               
                                                                               
  HB 370    -    APPROP: FY 95 OPERATING AND LOAN BUDGET                       
                                                                               
                 FY   95   operating  budget   overviews  were                 
                 presented   by   staff  from   the  following                 
                 agencies:                                                     
                                                                               
               Dept. of Community and Regional Affairs                         
                                                                               
                         Governor's Office                                     
                                                                               
                             Legislature                                       
                                                                               
                                                                               
  HB 370 APPROP: FY 95 OPERATING AND LOAN BUDGET                               
                                                                               
     BUDGET OVERVIEW - DEPT. OF COMMUNITY & REGIONAL AFFAIRS                   
                                                                               
  EDGAR  BLATCHFORD,  Commissioner,  Dept.  of  Community  and                 
  Regional  Affairs,  presented   his  opening  comments   via                 
  teleconference   from  Anchorage.     He  then   asked  that                 
  department staff in Juneau proceed with the overview.                        
                                                                               
  BRUCE GERAGHTY, Deputy Commissioner,  Dept. of Community and                 
  Regional Affairs, directed  attention to a handout  (copy on                 
  file  in  the  committee  minute book)  identifying  changes                 
  within  the department.   Major  operational  changes result                 
  from legislative action that brought rural programs from the                 
  Alaska Energy  Authority to  the department.   Major  budget                 
  decrements  were   derived  from  reductions   in  municipal                 
  assistance and revenue sharing, senior citizens and disabled                 
  veterans  property tax exemption and renter rebate programs,                 
  and non-funding of line-item designated grants.                              
                                                                               
  Comments followed  regarding the  department position  count                 
  and  impact  of  the  Governor's   hiring  freeze.    REMOND                 
  HENDERSON,  Director,  Administrative  Services,   Dept.  of                 
  Community and Regional  Affairs, said that only  3 positions                 
  are  presently  frozen.   Savings  from the  positions would                 
  total $74.0 over a six-month period.   Only $45.0 is general                 
  fund.                                                                        
                                                                               
  Discussion  followed  concerning  how   the  above-mentioned                 
  decrements  were  derived.    Mr.  Geraghty  explained  that                 
  initial instructions to the department were for a status quo                 
  budget.    That  budget  was  presented  to  the  Office  of                 
  Management and budget last fall.  Due to declining  revenues                 
  and further discussions,  the department  "came up with  the                 
  additional   reductions."     Co-chair   Frank  voiced   his                 
  understanding that the  department made no internal  cuts in                 
  costs such as travel  or other areas prior to  proposing the                 
  50%  cut  in  municipal  assistance,  total  elimination  of                 
                                                                               
                                                                               
  designated  grants,  etc.    Mr.   Geraghty  said  that  the                 
  department  budget had  been reduced  over past  years to  a                 
  point  where further  reduction  would  mean elimination  of                 
  programs.  Discussion followed regarding lack of elimination                 
  of administrative  costs associated  with designated  grants                 
  and other  decrements.  Mr.  Geraghty said that  if proposed                 
  reductions  are  enacted by  the  legislature "There  may be                 
  minor savings in personal services lines."                                   
                                                                               
  Senator   Kerttula   noted  that   reduction   of  municipal                 
  assistance and  revenue sharing  at the  state level  merely                 
  increases taxes  at the  local level.   He  then voiced  his                 
  displeasure  over  reductions  in  the  senior  citizen  and                 
  disabled veteran property tax exemption and renter rebate.                   
                                                                               
  In response to a request from Senator Phillips, Mr. Geraghty                 
  advised  of  the  following revenue  sharing  and  municipal                 
  assistance funding for FY 92 through 94:                                     
                                                                               
                           Revenue    Sharing        Municipal                 
  Assistance                                                                   
                                                                               
       FY 92                 $38,347.0          $46,648.0                      
       FY 93                  35,279.2           42,916.2                      
       FY 94                  32,809.7           39,912.1                      
                                                                               
  Senator  Phillips raised  questions regarding  the rationale                 
  and  the advocates behind the  proposed 50% reduction in the                 
  upcoming  budget.    Mr. Geraghty  said  that  discussion of                 
  reductions  originated at the  economic summit  in November,                 
  1992.   Virtually all groups at the  summit recommended that                 
  revenue sharing and municipal assistance be eliminated.  The                 
  department thus moved  in that direction.   Senator Phillips                 
  concurred  in  concerns expressed  by  Senator Kerttula  and                 
  suggested that  other areas should  be reduced prior  to the                 
  proposed cut.                                                                
                                                                               
  Senator Kerttula provided historical background on municipal                 
  assistance.    Mr. Henderson  noted  that 70%  of department                 
  funds   involve municipal  assistance, revenue  sharing, and                 
  senior programs.   There are  thus not many  other areas  in                 
  which to effect a $40 million reduction.  Elimination of all                 
  administrative and technical personnel  would yield only  $8                 
  million in general fund savings.                                             
                                                                               
  Discussion next reverted  to discussion of the  new Division                 
  of Energy.   ROBERT HARRIS, Director of  the division, spoke                 
  via teleconference  from Anchorage.   He  explained that  he                 
  assumed his position the middle of November when transfer of                 
  rural energy programs from the Alaska Power Authority to the                 
  new Division  of Energy  within the  Dept. of  Community and                 
  Regional Affairs was underway.  The  purpose of the Division                 
  of Energy, created by the legislature  in 1993, is to assist                 
  in development  of safe, reliable, energy  efficient systems                 
                                                                               
                                                                               
  throughout  Alaska.   Mr. Harris  highlighted  the following                 
  efforts:                                                                     
                                                                               
       Rural  operational  technical and  emergency assistance                 
  program.                                                                     
                            Bulk Fuel                                          
                      Circuit Rider Program                                    
                  Alternate and Applied Energy                                 
                   Rural Power Systems Upgrade                                 
         Compilation of Alaska Electric Power Statistics                       
                       Waste Heat Projects                                     
                                                                               
  Speaking  to  system  upgrades,  Mr.  Harris advised  of  19                 
  projects for FY 94, totaling $2  million.  Priority is given                 
  to communities willing to contribute 25%  of the cost of the                 
  project.  The  division seeks  to avoid continued  operation                 
  and maintenance costs for the projects.                                      
                                                                               
  Mr.  Harris next  noted that  the division  is  developing a                 
  feasibility study  for the  Copper  Valley Intertie  between                 
  Sutton and Glennallen.  It  is also actively pursuing  rural                 
  utility  consolidation  and   regionalization  as  well   as                 
  assisting   rural   utilities   with   business   management                 
  requirements.   Approximately 80 rural utilities  have fewer                 
  than 200 customers.  The power  cost equalization project is                 
  presently funded at approximately $17.5 million annually.                    
                                                                               
  Mr.  Harris  next explained  that  the  division administers                 
  loans  from  the  power  project fund  (the  four  dam  pool                 
  transfer fund).  It also administers power cost equalization                 
  and the rural electrification capitalization fund (also from                 
  the four dam  pool transfer fund).  Loans have not been made                 
  from the rural electric revolving loan  fund for a number of                 
  years,  mostly  because of  the  electric service  extension                 
  grant fund.   Most utilities  would rather  receive a  grant                 
  than borrow money.  The bulk fuel revolving loan fund allows                 
  communities with good  financial histories  to borrow up  to                 
  $100.0  and  pay it  back over  a  nine-month period.   This                 
  program  has been extremely  successful.  Last  year over 50                 
  communities were involved,  and that  number is expected  to                 
  increase to 60 or 65.                                                        
                                                                               
  The division of energy is now consolidated with the Dept. of                 
  Community  and  Regional  Affairs.   The  division  has been                 
  working on strategic energy plans,  internal work plans, and                 
  the  transition as it relates to  AIDEA.  Mr. Harris said he                 
  had also  spent considerable time meeting  with constituents                 
  in rural Alaska.  He stressed  need for on-site knowledge of                 
  utility systems.                                                             
                                                                               
  In response to a question  from Senator Jacko concerning the                 
  number  of  energy  authority  positions  before  and  after                 
  consolidation,  Mr. Harris  said  the division  has  roughly                 
  half.   The  division of  energy has  the bulk of  the staff                 
                                                                               
                                                                               
  transferred  from  the  former   energy  authority.     Some                 
  administrative positions have been placed under the division                 
  of   administrative  services,   three  or   four  positions                 
  associated with specific projects such as Bradley Lake moved                 
  to  AIDEA,  and  positions   associated  with  operation  of                 
  specific  hydroelectric  projects  (Bradley Lake  was  again                 
  cited)  have  been  picked up  by  utility  companies (Homer                 
  Electric was noted).                                                         
                                                                               
  Senator Jacko new inquired concerning  staff for the circuit                 
  rider program.   Mr. Harris  said that three  positions from                 
  rural construction  maintenance were eliminated.   Contracts                 
  were then entered  with Kotzebue Electric, Alaska  Power and                 
  Telephone, and Alaska  Power Systems.  The  function remains                 
  and more  individuals, statewide,  are now  involved in  the                 
  program than before.                                                         
                                                                               
  Lengthy Discussion  followed regarding the  twelve positions                 
  transferred to administrative  services from the  thirty-two                 
  administrative  positions in  the  Alaska Energy  Authority.                 
  Bruce Geraghty attested  to concerns  relating to  technical                 
  expertise  within  the  division of  energy  and  ability to                 
  provide the  same level  of service  to  which utilities  in                 
  small  communities are  accustomed.   Identified  procedural                 
  process  problems  have consumed  a good  amount of  the new                 
  director's time.  The transfer resulted in a  reduction from                 
  the nearly 80 positions in the Alaska Energy Authority "down                 
  to just over 40."                                                            
                                                                               
  Senator  Sharp  raised  a  question  concerning  the  $525.0                 
  general  fund increment  and administrative  costs of  power                 
  cost  equalization and  other  projects.   Remond  Henderson                 
  explained that, in past years, operational funding came from                 
  a combination of sources.                                                    
                                                                               
  End, SFC-94, #16, Side 1                                                     
  Begin, SFC-94, #16, Side 2                                                   
                                                                               
  This  year  the  operating budget  is  based  on operational                 
  funding from general  funds.  The $3.9  million appropriated                 
  for FY 94 was used as a base.  Funds for operations will not                 
  be deducted from  the revenue flow prior  to distribution to                 
  various programs.  Approximately $4 million in general funds                 
  is requested for  operations.   Further  discussion followed                 
  between Senator Sharp  and Mr. Henderson regarding  past use                 
  of  CIP  moneys  for operational  funding.    Co-chair Frank                 
  raised both budgetary and policy concerns regarding proposed                 
  use of general funds for operations.                                         
                                                                               
  Senator  Sharp  voiced  his  recollection  that  power  cost                 
  equalization  was  capped  at  $18  million.   The  proposed                 
  budget, however, seeks $18.6 million.                                        
                                                                               
  Co-chair Frank  called for additional questions  or comments                 
                                                                               
                                                                               
  regarding the proposed budget for the Dept. of Community and                 
  Regional Affairs.  None were forthcoming.                                    
                                                                               
                                                                               
  SB 243 FOUR DAM POOL TRANSFER FUND                                           
                                                                               
  Co-chair Frank  directed  that  SB  243 be  brought  on  for                 
  discussion.                                                                  
  MIKE GREANY,  Director, Legislative  Finance Division,  came                 
  before committee.   He explained  that SB 243,  sponsored by                 
  the  Legislative   Budget  and  Audit   Committee,  contains                 
  specific, remedial legislation to respond  to a concern that                 
  arose  in  November.     One  of  the  elements  of   energy                 
  legislation passed last year abolished the power development                 
  revolving loan fund and  moved the money to a  newly created                 
  four-dam-pool transfer fund.  The intent was that money from                 
  the transfer fund would flow to three receiving funds:                       
                                                                               
       1.   Power cost equalization                                            
       2.   Southeast energy fund                                              
       3.   Statewide power projects                                           
                                                                               
  Additional  legislation  contained  a capital  appropriation                 
  from the Southeast energy fund for a specific intertie.  The                 
  substantive  legislation  spoke to  flow  of money  from the                 
  four-dam-pool  transfer fund  to the three  receiving funds,                 
  "subject   to   appropriation."      No  appropriation   was                 
  subsequently made to  get the moneys to  the three receiving                 
  funds.    Legislative  Budget  and  Audit   then  introduced                 
  legislation that deleted "subject to appropriation" language                 
  so  that  the  money  would  automatically  flow  through  a                 
  transfer process from the four-dam-pool transfer fund to the                 
  receiving funds.                                                             
                                                                               
  Mr. Greany next spoke to the funding of administrative costs                 
  from transfer fund  moneys.  He  explained that moneys  from                 
  the former power  development revolving  loan fund paid  for                 
  certain  administrative   costs  in  the   past.     Current                 
  legislation does not provide for that.  If  the desire is to                 
  fund a  portion of the  administrative costs from  the four-                 
  dam-pool  transfer  fund  or  the   three  receiving  funds,                 
  legislation so specifying would be needed.  Mr. Greany noted                 
  an open  question,  concerning the  legislature's  power  of                 
  appropriation,  absent specific  statutory  authority.   The                 
  clearest approach  would be through  statute designating how                 
  administrative costs will be addressed.                                      
                                                                               
  RANDY WELKER, Legislative  Auditor, added that SB  243 would                 
  not preclude  the legislature  from appropriating  operating                 
  costs  from  the  subject  funds.   Senator  Sharp  directed                 
  attention to page 1, line 4, of the bill and  noted language                 
  allowing for appropriation of administrative costs prior  to                 
  effecting the 40/40/20  transfer.  Mr. Welker  concurred and                 
                                                                               
                                                                               
  added  that  there  is  nothing   that  would  preclude  the                 
  legislature  from   making  appropriations  "out   of  those                 
  receiving funds either."                                                     
                                                                               
  Co-chair  Frank voiced  a preference  for specific  language                 
  clarifying that administrative  costs are  to flow from  the                 
  transfer or receiving  funds rather than leaving  that issue                 
  to the budget process.  He then requested that staff work on                 
  a proposed  amendment to  the bill to  accomplish that  end.                 
  Bruce Geraghty said the department views SB 243 as technical                 
  in nature.   He cautioned against narrowing  the approach to                 
  funding energy operations.                                                   
                                                                               
  Co-chair Frank asked how the department would respond should                 
  the  legislature  disallow  general  fund  increases.    Mr.                 
  Geraghty noted that  the Alaska Energy Authority  budget for                 
  FY 94 totaled $8.4 million.   That has been reduced to $3.9.                 
  The division is  making an effort to return  several million                 
  dollars to the  general fund.   He next spoke to  continuing                 
  transfer of moneys and functions  from the Dept. of Commerce                 
  and Economic Development to Dept.  of Community and Regional                 
  Affairs.                                                                     
                                                                               
  Mr. Greany explained that the legislature has the ability to                 
  appropriate at any of the steps along  the way.  It would be                 
  clearer  to   specify  at   which  point   in  the   process                 
  administrative costs should be addressed:                                    
                                                                               
       1.   Before distribution to receiving funds.                            
       2.   As part of the receiving funds on a prorated                       
            percentage.                                                        
                                                                               
  Co-chair  Frank  advised  that the  issue  would  be further                 
  considered and brought back for discussion  at a later time.                 
  He then directed that SB 243 be HELD in committee.                           
                                                                               
                                                                               
  SB 247 STATE LEASES & LEASE-PURCHASE FINANCING                               
                                                                               
  Co-chair  Frank  announced  that SB  247  would  be  HELD in                 
  committee pending preparation of technical amendments.                       
                                                                               
                                                                               
  HB 370 APPROP: FY 95 OPERATING AND LOAN BUDGET                               
                                                                               
            BUDGET OVERVIEW - OFFICE OF THE GOVERNOR                           
                                                                               
  MIKE NIZICH, Director, Division of Administrative  Services,                 
  Office of the Governor, came before committee.  He said that                 
  the FY 95 budget for the  Governor's Office totals $20,723.3                 
  and is comprised of:                                                         
                                                                               
                                                                               
       federal receipts                   $2.9 million                         
       general fund match                  1.5 million                         
       general fund                       16.0 million                         
       general fund program receipts       4.9 thousand                        
       interagency receipts              121.0 thousand                        
                                                                               
  The foregoing represents a $2,544.5 increase  over the FY 94                 
  adjusted base  ($423.9 in  federal funding  and $2,120.6  in                 
  general funds).                                                              
                                                                               
  Co-chair Frank noted that the  overview from the Division of                 
  Legislative  Finance shows  different numbers.   Mr.  Nizich                 
  said he  would look  into the  differences.   He noted  that                 
  general fund increases relate predominantly  to the Division                 
  of Elections.                                                                
                                                                               
  The position count for  FY 95 is 174 full-time  (an increase                 
  of  3  permanent  full-time positions).    The  request also                 
  includes 4 permanent part-time and 48 temporary (an increase                 
  of 29).                                                                      
                                                                               
  The budget includes three  general fund increments  totaling                 
  $2,135.8 for  the Division of Elections.  The first consists                 
  of $110.0 for a precinct map feasibility study.  An RSA with                 
  the Dept. of Labor is presently budgeted.  The Office of the                 
  Governor  has since changed that request  and will provide a                 
  budget amendment  indicating  that  other  state  agency  or                 
  private sector assistance will be sought for the study.  The                 
  project  is  intended  to   ensure  greater  efficiency   in                 
  reapportionment activities and provide district and precinct                 
  maps to candidates.                                                          
                                                                               
  The second  incremental request relates to  partially closed                 
  primary costs.   It totals $309.6  and reflects the cost  of                 
  the split ballot primary election.                                           
                                                                               
  A total  of  $1,716.2  is also  requested  for  the  on-year                 
  election increment to operate primary and general elections.                 
  An  additional   29  temporary  positions   is  also   being                 
  requested.                                                                   
                                                                               
  The  Human   Rights  Commission  requests   federal  receipt                 
  authority for $33.9 thousand.   The Commission receives EEOC                 
  funding in support  of efforts in resolving  cases involving                 
  employment and housing discrimination.   Funding is based on                 
  a  flat fee  of $500.00  for processing  and  resolving each                 
  case.  Mr.  Nizich pointed to recent LBA  approval of an RPL                 
  which increased FY 94 funding  by $42.0, bringing the  total                 
  to $90.0.                                                                    
                                                                               
  The Executive Office is requesting federal receipts of $25.0                 
  for the client assistance  program.  This is the  third year                 
  the office  has administered  this program  which was  taken                 
  over from the  Dept. of Education.   It is authorized  under                 
                                                                               
                                                                               
  Title I  of the  Rehabilitation Act  of 1973  and is  funded                 
  through  the  U.S. Dept.  of  Education.   The  program  was                 
  authorized to receive $75.0 in FY 94.  LBA recently approved                 
  a request for an additional $25.0.                                           
                                                                               
  The EPA  pollution prevention  program is  in its  third and                 
  final year.  In 1991  the state was awarded $270.0 from  the                 
  U.S.  Environmental  Protection  Agency  for  a   three-year                 
  program  entitled,  "Building  Sustainable   Communities  in                 
  Alaska."   The state  has been  notified that an  additional                 
  $30.0 is available for this green star program.  In response                 
  to a question from Senator Kerttula, Mr. Nizich advised that                 
  the program is conducted through agreements with entities in                 
  various  communities  and  assistance  from   the  Dept.  of                 
  Environmental  Conservation.    Senator   Kerttula  inquired                 
  regarding radiation leaks at  Amchitka.  Mr. Nizich  said he                 
  would check into the matter and report back.                                 
                                                                               
  Mr. Nizich next  spoke to the  success of the media  support                 
  center in  both its  printed efforts  and video  production.                 
  The  center  anticipates  receipt  of an  additional  $121.0                 
  through RSAs with various agencies.  In response to  Senator                 
  Kerttula's  concern regarding controls  over the center, Mr.                 
  Nizich  said  that  the  center  works in  conjunction  with                 
  departments to  put out  information to  assist the  general                 
  public.    The  media  center  is  not  commingled with  the                 
  Governor's press  office.   Co-chair Frank  noted that  last                 
  year  the legislature reduced the  request for the center to                 
  $247.0.  Mr.  Nizich spoke  to intent to  utilize RSA  funds                 
  from video productions  for media  center support.   Senator                 
  Sharp  asked  if,  in  the  past, agencies  contracted  with                 
  private firms  for media  work. Mr.  Nizich  spoke to  media                 
  center hire  of technical  staff with  video expertise.   He                 
  acknowledged occasional private sector contract for graphics                 
  or animation.  Use of video is relatively new for most state                 
  agencies.                                                                    
                                                                               
  Co-chair Pearce requested a chart of  staff at the Office of                 
  Governmental Coordination  and funding associated  with each                 
  position.  Mr. Nizich agreed to provide the information.  He                 
  explained that positions  remain as long as  federal funding                 
  is forthcoming.  When it  is discontinued, the positions are                 
  eliminated.                                                                  
                                                                               
  Mr.  Nizich   advised  that   the  Office   of  Governmental                 
  Coordination anticipates receiving a $234.0 increase in  the                 
  coastal management  program.   That involves  two positions,                 
  one of which  is federally funded,  and the other is  funded                 
  from  state  match.   The  other  federally  funded position                 
  relates to  a request to receive $101.0 for non-point source                 
  pollution control funds.                                                     
                                                                               
  Mr. Nizich said  that two,  technical budget amendments  are                 
  anticipated.  The first relates to a $15.2 transfer from the                 
                                                                               
                                                                               
  executive office for  leasing, and the other to the Division                 
  of Elections for the geographic information system.                          
                                                                               
  A supplemental funding request for FY 94 is not anticipated.                 
                                                                               
                                                                               
  SHELBY STASTNY, Director,  Office of Management and  Budget,                 
  came before committee in response to a question from Senator                 
  Kerttula.  Mr.  Stastny said  that conversion of  short-term                 
  contractual staff to full time occurred prior to his tenure.                 
  Five,  temporary,  one-year  positions  for  the  efficiency                 
  review team are gone.                                                        
                                                                               
  End, SFC-94, #10, Side 2                                                     
  Begin, SFC-94, #12, Side 1                                                   
                                                                               
                  BUDGET OVERVIEW - LEGISLATURE                                
                                                                               
  MIKE   GREANY,   Director,  Legislative   Finance  Division,                 
  directed attention to a three-page  handout (copy on file in                 
  the committee minute book) and explained that  it contains a                 
  summary of FY 94 and 95 budgets.   A second handout (copy of                 
  file) contains  a  history and  description  of  legislative                 
  agencies.                                                                    
                                                                               
  Amounts  set  forth  on  the  first  handout  reflect  funds                 
  appropriated by  the conference  committee for  FY 94,  plus                 
  carry-forward amounts included in  the reappropriation bill.                 
  The FY 95 budget is at the same level as 94.  Co-chair Frank                 
  directed attention to the shortform  for the legislature and                 
  noted expenditure of $30,661.5 in FY 93.  He then referenced                 
  FY 94 and proposed FY 95 funding of $41,471.3 and noted that                 
  in excess of $10 million  over actual expenditure appears to                 
  be budgeted.   Excess funding is shown  as the FY 93  carry-                 
  forward.     Senator  Kerttula noted  that  portions of  the                 
  carry-forward might reflect an accumulation over a number of                 
  years.                                                                       
                                                                               
  Mr. Greany next  directed attention  to transfer of  funding                 
  from Senate  Finance to  Council and  Subcommittees for  the                 
  Ethics Committee as well as  transfer within the Legislative                 
  Council component to Public Services.                                        
                                                                               
  RANDY  WELKER Legislative Auditor,  came before committee to                 
  speak to the budget for the  Legislative Audit Division.  He                 
  referenced conference committee funding of $2,743.1 and said                 
  that it is  consistent with the maintenance  level budget of                 
  the  past  several  years.   Actual  expenditure  has ranged                 
  between $2.5  and $2.6 million.  That  produced a cumulative                 
  carry-forward  of  $221.3.   Mr.  Welker explained  that the                 
  carry-forward is  not considered  when the  basic budget  is                 
  developed each year.  The request for the coming fiscal year                 
  supports the  existing  36  positions.   In  response  to  a                 
  question  from  Senator  Kerttula, Mr.  Welker  attested  to                 
                                                                               
                                                                               
  sufficient work  to keep  20 additional  auditors busy.   In                 
  response to an  additional question,  he referenced a  flex-                 
  time  policy   reviewed,  modified,  and  approved   by  the                 
  Legislative Budget and Audit Committee.                                      
                                                                               
  Mr.  Greany, Director,  Legislative Finance  Division, again                 
  came  before  committee.     He   referenced  three,   major                 
  components within the division:                                              
                                                                               
       1.  House Finance Committee                                             
       2.  Senate Finance Committee                                            
       3.  The division administrative office                                  
                                                                               
  Co-chair Frank asked if House  and Senate Finance Committees                 
  are budgeted for  the same amount.   Mr. Greany attested  to                 
  past budgeting of  like amounts.   However,  in most  recent                 
  conference committee  action, a greater reduction  was taken                 
  to the Senate Finance  Committee.  In response to  a request                 
  from  Co-chair Frank, Mr. Greany  said that he would provide                 
  the exact amount to committee.                                               
                                                                               
  Amounts shown for  committee expenses  reflect costs of  the                 
  Legislative  Budget and Audit  Committee, including staff to                 
  the chairman, authorized travel  for committee meetings, and                 
  contractual work.   Co-chair Frank noted that  the committee                 
  spent $144.0.   The conference committee  authorized $300.0.                 
  With  the  reappropriated  carry-forward,   funding  totaled                 
  $767.0.  Mr. Greany concurred in those numbers.                              
                                                                               
  Senator  Kelly  raised  questions concerning  administrative                 
  staff.  Mr. Greany listed himself, six fiscal analysts,  two                 
  administrative positions, and two data processing positions.                 
  Senator Kerttula raised  questions regarding the substantial                 
  turnover in the division and voiced  concern that new staff,                 
  experiencing a learning curve, might not be able  to provide                 
  the needed checks  and balances between the  legislature and                 
  the administration.  Mr. Greany  responded that the division                 
  enjoyed low turnover for a number of years.  During the past                 
  interim, five  of  the six  analysts  moved on  to  advanced                 
  positions.  Two  moved from range 22  to range 26.   A third                 
  moved  to range  23.  A  fourth made  a lateral move  to the                 
  Office of Management and Budget, and the fifth took a cut in                 
  pay to fill an administrative officer  position in the Dept.                 
  of Health and  Social Services.  Senator  Kerttula suggested                 
  that  such  a   substantial  turnover  evidences  management                 
  problems.  Senator  Kelly noted that  most of those  leaving                 
  the division  took promotions.   He further noted  that word                 
  was out that the legislature  intended to cut the  division,                 
  and he suggested that that may have motivated turnover.  The                 
  problem may be political rather than managerial.                             
                                                                               
  Co-chair  Frank  referenced information  furnished  by staff                 
  indicating  funding  of House  Finance  at $1.5  million and                 
  Senate Finance at $1.2 million.                                              
                                                                               
                                                                               
  PAM STOOPS, Executive Director, Legislative Affairs  Agency,                 
  next came before committee to speak to the ten components in                 
  the agency  budget.   She explained  that carry-forwards  in                 
  salaries  and  allowances  would  be  utilized to  fund  the                 
  increase in the annual allowance.   The budget for executive                 
  administration  will  not be  presented  to  the Legislative                 
  Council until February.  FY 94 was the first year components                 
  were  allowed  to  retain their  individual  carry-forwards.                 
  Past  carry-forward  funding   was  reappropriated  to   the                 
  legislative operating  budget.  Carry-forward  increases for                 
  salary expenses and the legislative operating budget are due                 
  to decreased staff positions  in the House and Senate.   The                 
  FY 94 budget was maintenance level.                                          
                                                                               
  Ms. Stoops next provided the following component analysis:                   
                                                                               
  Salaries and allowances  funds salaries,  per diem, and  the                 
  annual office allowance for the sixty legislators.                           
                                                                               
  Executive  administration  funds  data  processing  and  the                 
  office of  the executive director, including data processing                 
  chargeback  for  the  entire  legislature  as  well  as  the                 
  Ombudsman.                                                                   
                                                                               
  Public services funds the 20 legislative information offices                 
  throughout the state and long-distance teleconference costs.                 
                                                                               
                                                                               
  Administrative services funds  accounting personnel,  summer                 
  tour guides for the capitol building, and the print shop.                    
                                                                               
  Legal services funds  attorneys and  support staff for  bill                 
  drafting,  the  legislative  reference   library,  the  code                 
  revision commission, and uniform law commissioners.                          
                                                                               
  Session expenses pays  for operation of the  120-day session                 
  and interim  operation of the  Chief Clerk's and  the Senate                 
  Secretary's  offices.     Approximately  212  positions  are                 
  budgeted in this component.  In  response to a question from                 
  Co-chair  Frank concerning funding for session and full-time                 
  aides, Mrs. Stoops  said that  positions are budgeted  under                 
  session expenses for  four months and under  the legislative                 
  operating  budget or legislative  finance or  audit division                 
  budgets for the remaining eight months.                                      
                                                                               
  Council and subcommittees funds the chair of the Legislative                 
  Council,  the  Ethics  Committee, Administrative  Regulation                 
  Review, and  special committees  and task  forces.   Senator                 
  Kerttula noted that  the Ethics  Committee was supported  by                 
  Senate Finance rather than the Legislative Council.                          
                                                                               
  General services  funds legislative leases  and salaries and                 
  expenses of maintenance and supply staff.                                    
                                                                               
                                                                               
  The Legislative  Research Agency provides  research services                 
  to both the House and Senate.                                                
                                                                               
  The  Legislative Operating  Budget  component funds  interim                 
  operations, staff, travel, and contracts.   It also contains                 
  leadership accounts authorized at $8.4 million.  The initial                 
  appropriation  provided $2.5  million  each  for  House  and                 
  Senate leadership.  The carry-forward on the Senate side was                 
  considerably higher than  the House.   Mrs. Stoops said  she                 
  would provide actual figures.                                                
                                                                               
  No one was present to speak to the budget for the Ombudsman.                 
  In response  to questions  from Senator  Kelly, Mrs.  Stoops                 
  advised that  the office  does its  own administrative  work                 
  with  assistance  from  Legislative  Affairs.     One  staff                 
  position  within   the  Ombudsman's   office  handles   both                 
  accounting and personnel functions.                                          
                                                                               
  Speaking to the  overall Legislative Affairs  Agency budget,                 
  Senator  Kerttula  inquired concerning  areas that  might be                 
  reduced.  Mrs. Stoops said that the agency, with  assistance                 
  from  the  Division   of  Personnel  within  the   Dept.  of                 
  Administration, would be conducting a  salary review for all                 
  positions  to  see  how  they   compare  with  other  exempt                 
  positions in the  executive branch.   She acknowledged  that                 
  areas could be cut, but not without impact.                                  
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:30 a.m.                        
                                                                               
                                                                               

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