Legislature(1993 - 1994)
04/06/1994 08:25 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 6, 1994 8:25 a.m. TAPES SFC-94, #59, Side 1 (250-end) SFC-94, #59, Side 2 (end-000) SFC-94, #61, Side 1 (000-end) CALL TO ORDER Senator Steve Frank, Co-chair, convened the meeting at approximately 8:25 a.m. PRESENT In addition to Co-chair Frank, Senators Jacko, Rieger, Sharp, Kelly, and Kerttula were present. Co-chair Pearce did not attend the meeting. ALSO ATTENDING: Jon Sherwood, and Kevin Henderson, Medical Assistance Administrators, Division of Medical Assistance, Department of Health & Social Services; Nancy Bear Usera, Commissioner, Department of Administration; Tim Wilson, Executive Director, Alaska State Council on the Arts; Loren Rasmussen, Chief, Design, Construction Standards, Department of Transportation & Public Facilities; Josh Fink, aide to Senator Kelly; Sherry Goll, Lobbyist, Alaska Women's Lobby; Mary Gay, Director, Child Support Enforcement Division, Department of Revenue; Judith DeSpain, Deputy Executive Director, Alaska Housing Finance Corporation, Department of Revenue; Susan Miller, Manager, Special Projects, Alaska Court System; Donna Page, Senior Hearing Officer, Department of Revenue; David Skidmore, aide to Senator Frank; Jo Fenety, aide to Senator Pearce; Fred Fisher, Jetta Whittaker, Dana LaTour, and Mike Greany, Director, Legislative Finance Division; aides to committee members and other members of the legislature. TELECONFERENCE: Mike Hostina, Deputy Ombudsman, Fairbanks; David Rose, financial advisor to the Alaska Municipal League Investment Pool and former chair of the Permanent Fund, Anchorage; and Kit Duke, Facilities Manager, Administration, Alaska Court System, Anchorage. SUMMARY INFORMATION CSSB 190(JUD): An Act relating to income withholding and other methods of enforcement for orders of support; and providing for an effective date. The committee ADOPTED CSSB 190(FIN) work draft "U" which incorporated amendments 1 and 2 ADOPTED in a previous meeting. Mary Gay, Director, Child Support Enforcement Division, Department of Revenue; Josh Fink, aide to Senator Kelly; Mike Hostina, Deputy Ombudsman, via teleconference Fairbanks; Sherry Goll, Lobbyist, Alaska Women's Lobby; Susan Miller, Manager, Special Projects, Alaska Court System; and Donna Page, Senior Hearing Officer, Department of Revenue, all testified on the bill. On page 11, line 5, the word "intentionally" was added to work draft "U", and amendments 3, 4, 5, 6, and a letter of intent were also ADOPTED. CSSB 190(FIN) was REPORTED OUT of committee with individual recommendations, and new fiscal notes for the Department of Revenue - $109.0, and the Alaska Court System - $33.7. SB 359: An Act relating to investment pools for public entities; and providing for an effective date. SB 359 was HELD in committee. (HB 450, companion bill to SB 359, was REPORTED OUT of committee.) SB 363: An Act making appropriations for capital project matching grant funds and for capital projects; and providing for an effective date. Scheduled but not heard. Rescheduled for Saturday, April 12, 1994. SB 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. David Skidmore, aide to Senator Frank, spoke to the bill. Jon Sherwood, Medical Assistance Adminis-trator, Division of Medical Assistance, Department of Health & Social Services, answered questions regarding the bill. Amendments 1 and 2 had been ADOPTED in a previous meeting. Amendments 5, 6, 7, and a letter of intent were ADOPTED. SB 366 was REPORTED OUT of committee with individual recommendations and three fiscal notes for the Department Health & Social Services: Claims Processing - $130.0, Medicaid Facility - $(550.0), and Medicaid Non-Facility - $(799.1). SB 369: An Act relating to the maintenance of and art requirements for certain public buildings and facilities and to the art in public places fund; and providing for an effective date. Jo Fenety, aide to Senator Pearce; Nancy Bear Usera, Commissioner, Department of Administration; and Loren Rasmussen, Chief, Design, Construction Standards, Department of Transportation & Public Facilities, testified in support of SB 369. Kit Duke, Facilities Manager, Administration, Alaska Court System, testified via teleconference from Anchorage regarding the Court System's art projects. Tim Wilson, Executive Director, Alaska State Council on the Arts, was opposed to the section in SB 369 that repealed the 1 percent for arts. Extensive discussion was had regarding the building maintenance fund and how moneys would be appropriated and designated for departments/ agencies. SB 369 was HELD in committee for further discussion. HB 450: An Act relating to investment pools for public entities; and providing for an effective date. Dave Rose, financial advisor to the Alaska Municipal League Investment Pool and former chair of the Permanent Fund, testified via teleconference from Anchorage. HB 450 was REPORTED OUT of committee with a "due pass" and a zero fiscal note for Department of Commerce & Regional Affairs. (Companion bill SB 359 was held in committee.) CSSJR 36(JUD): Proposing amendments to the Constitution of the State of Alaska requiring a runoff election when the candidates for governor and lieutenant governor obtaining the greatest number of votes at the general election do not receive more than 40 percent of the votes cast, and changing the term of office of the governor and the lieutenant governor. Scheduled but not heard. SENATE BILL NO. 359: An Act relating to investment pools for public entities; and providing for an effective date. SB 359 was HELD in committee. (HB 450, companion bill to SB 359, was REPORTED OUT of committee.) HOUSE BILL NO. 450: An Act relating to investment pools for public entities; and providing for an effective date. CO-CHAIR FRANK announced that SB 359 and its companion bill, HB 450 were before the committee. He invited David Rose to testify via teleconference. DAVID ROSE, financial advisor to the Alaska Municipal League Investment Pool, and former chair of the Permanent Fund, testified via teleconference from Anchorage. He said that AS 37.23 empowered cities and boroughs within Alaska to be able to pool their money and co-invest. Some reasons were to preserve principle, enhance yield, provide liquidity, and secure some professional funds management. Currently, there was one pool in existence and that was the Alaska Municipal League Investment Pool. Currently 28 cities and boroughs belong to the pool and 19 have money currently under investment, with a balance of approximately $32M. SB 359 and HB 450 attempted to make some technical changes in order to enhance the yield for cities and boroughs. He assured the committee it would not involve the state nor any funds via a fiscal note. Mr. Rose went on to say that the bill had three active sections. Section 1 qualified AS 37.23.020 to permit the purchase of floating rate securities provided there was an annual rate reset. These floating rate securities would allow the pool to earn additional money. Section 1 also qualified language which permitted the purchase of "Yankee" securities, or purchases from unrated branches of rated banks. Section 2 was a new section and explicitly authorized the lending of securities provided that collateral was received. There had been a request that the legislation specifically authorize this although it seemed to be covered under the prudent investor rule. Section 3 removed a restriction that limited the amount of bank paper that may be held at the 30 percent level. The 30 percent restriction severely restricted the pool when investing in banks. Mr. Rose felt the amendments were technical but allowed the pool to increase earnings on its money. In answer to Senator Kerttula, Mr. Rose said that the existing legislation was created about three years ago and the restrictions were based more on a mutual fund basis and needed to be adjusted for the existing market. In answer to Co-chair Frank, Mr. Rose confirmed that on page 3, line 11, those items would not be contained in the pool portfolio. Senator Kelly MOVED for passage of HB 450 from committee with individual recommendations. No objection being heard, it was REPORTED OUT of committee with a "do pass," and a zero fiscal note for the Department of Commerce & Regional Affairs. Co-chair Frank, Senators Sharp, Jacko, Kelly, Rieger and Kerttula signed "do pass." SENATE BILL NO. 366: An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Co-chair Frank announced that SB 366 was before the committee. He noted that amendments 1 and 2 had previously been ADOPTED in a prior meeting. He invited David Skidmore, his aide, to speak to the bill and several new amendments. DAVID SKIDMORE said that amendment 5 created a new section imposing a co-payment requirement for inpatient hospital services of $50 a day, up to a maximum of $200. He said that was the same co-payment policy under Alaska's general relief medical program. Senator Sharp MOVED amendment 5. No objection being heard, it was ADOPTED. Senator Rieger said he would like to propose amendment 6 but felt it did not exactly mirror the letter of intent. In answer to Co-chair Frank, Senator Rieger said intent language read "to the maximum extent allowed under federal law." Co-chair Frank supported the amendment and felt it was not inconsistent with the intent language. JON SHERWOOD, Medical Assistance Administrator, Division of Medical Assistance, Department of Health & Social Services, said that seeking a waiver would be permissible under federal law. He felt the department would not have a problem with either the letter of intent or amendment 6. He said he would let the committee know this afternoon if the department had received any waivers. Senator Rieger MOVED amendment 6. Co-chair Frank suggested that language be added requiring a report to the legislature. Senator Rieger said it was his intent to reduce reports to the legislature. Co-chair Frank withdrew his proposed language. No further objection being heard, amendment 6 was ADOPTED. Senator Rieger said that there was a need on the part of the department to use discretion in regard to waivers. He felt the intent language would be important. Senator Rieger MOVED amendment 7. He said the utilization review the department used needed to be evaluated and this amendment authorized that. It also gave a case manager authorization to approve optional services without following the priority listing in order to design a more cost effective program. Mr. Sherwood said that presently case management ideas were being considered and evaluated. Any case management would require case managers. Senator Rieger felt that the state would be far ahead if it put $1M of general funds into fund case management and, in turn, received $3M from the feds. Mr. Sherwood agreed there was a 75 percent match when professional case management was used. End SFC-93 #59, Side 1 Begin SFC-93 #59, Side 2 Discussion was had by Senators Sharp, Rieger, and Co-chair Frank regarding pre-authorization, the priority listing and optional services. Senator Rieger informed the committee that the legislature did not determine which items were on the priority list, but was decided by the department after budget funding. In answer to Senator Sharp, Senator Rieger doubted there was any integrity to the priority list and money could be saved by being able to choose a less expensive service that appeared lower on the priority list. Hearing no objection, amendment 7 was ADOPTED. Senator Sharp MOVED the letter of intent adding language that said "a report shall be made to include a listing of waivers sought from the federal government and an indication of those granted." No objection being heard, the letter of intent as amended was ADOPTED. Senator Sharp MOVED for passage of CSSB 366(FIN) as amended from committee with individual recommendations. No objection being heard, it was REPORTED OUT of committee with individual recommendations, a zero fiscal note for the Department of Commerce & Economic Development, and fiscal notes for the Department of Health & Social Services as follows: Claims Processing-$130.0, Medicaid Facilities- $(550.0), and Medicaid Non-facilities-$(799.1). Co-chair Frank and Senator Rieger signed "do pass." Senators Sharp, Jacko, Kelly and Kerttula signed "no recommendation." SENATE BILL NO. 369: An Act relating to the maintenance of and art requirements for certain public buildings and facilities and to the art in public places fund; and providing for an effective date. Co-chair Frank invited Jo Fenety, aide to Co-chair Pearce, to speak to the bill. JO FENETY announced that Kit Duke, Facilities Manager, Administration, Alaska Court System, would be testifying via teleconference from Anchorage. In answer to Co-chair Frank, Ms. Fenety explained that the only change made in CSSB 369(FIN) was the addition of two non-voting members to the review committee. Ms. Fenety explained SB 369 as a plan to get a handle on the huge problem of deferred maintenance of state-owned buildings. She said the word "huge" was used not only to get the committee's attention but to impress upon them the consequences of the continued failure to act. The state owns 1,717 buildings, valued at $2.3 billion and their average age is 20.7 years. For comparison, she added the buildings' value was equal to one-fifth of the permanent fund. Through the years, and for a variety of reasons, the state had chosen to put off the inevitable when it came to taking care of the buildings owned. Budgetary restraints or other priorities had forced operating appropriations for routine maintenance to the bottom of the list and, in some cases, off the list entirely. Today, the state had a documented maintenance backlog of about $251 million, or more than 10 percent of the assessed value. Through the state's failure to perform scheduled routine maintenance, small problems had become large problems. The leaking roof that could have been fixed for a few thousand dollars in an operating budget had become a roof replacement project costing a million dollars or more in the capital budget. She went on to say that Co-chair Pearce believed it was the state's duty to preserve and protect the state's assets, and in this case, with this bill, it was public buildings. She pointed out that SB 369 did not ask for the $251 million estimated to fix the whole problem, nor did it ask for a large bureaucracy. Instead, it asked for the first step in a systematic plan by creating the Facilities Major Maintenance Fund. Into that fund would go 1 percent of all construction costs on a one-time basis. This bill also repealed the statutes effecting the 1 percent for art program. Ms. Fenety justified this rationale by saying when the buildings were in need of repair, the state could not afford the luxury of art. It was better to fix the leaking roof. She noted that SB 369 was the vehicle to accept proceeds from general obligation and revenue bonds that were also slated to go into this fund. Federal funds, additional appropriations, if available, interest on the fund, and an annual maintenance assessment fee would also go into this fund. Ms. Fenety went on to explain the annual maintenance assessment fee would be an amount charged to all state agencies that occupy state-owned buildings. This assessment fee established annually by the committee would help link the perceived need for space by a state agency to the real cost for occupying that space. The University of Alaska buildings were included in the provisions of this bill, but all provisions were parallel and separate. Schools and international airport facilities were not included in this bill. She pointed out that SB 369 had to do with buildings, not roads, ports, or docks. She felt that the concepts presented in the bill were no more complicated than what would be done to protect family-owned assets. It made sense to forego a luxury in order to preserve a family home, and even though everything could not be fixed at once, a plan would be created to incorporate repairs. That idea was the substance of SB 369. In answer to Senator Kelly, Ms. Fenety said that the University's Major Maintenance Fund would be totally separate from the state's Major Maintenance Fund and would not receive any assessed money from state buildings. She went on to say that the University wanted to be included in SB 369 but requested a separate system within the bill. Co-chair Frank confirmed that at the time of new construction, one percent of construction costs would be put into the fund. He then asked how the appropriations would come out of the fund. Ms. Fenety said a review committee would prioritize and recommend annually, maintenance projects to be funded. She referred the committee to Sec. 35.50.040 that explained the State Building Major Maintenance Review Committee would be established in the Department of Administration and the Commissioner of that department would be the chair. The Commissioner of the Department of Transportation & Public Facilities (DOT&PF) would be a permanent member of the Committee, and three other department heads, appointed by the Governor, would serve two-year rotating terms. CSSB 369(FIN) added two non- voting members, the administrative director of the Alaska Court System, and the executive director of the Legislative Affairs Agency. Co-chair Frank then confirmed that the Major Maintenance assessment fee would be determined by the committee each year by the square feet occupied. Ms. Fenety agreed that the rate would be established by the committee which was in addition to the 1 percent of cost at time of construction. Co-chair Frank asked how that compared with what was happening now. Ms. Fenety asked Nancy Bear Usera, Commissioner, Department of Administration, and Kit Duke, Facilities Manager, Administration, Alaska Court System, via teleconference from Anchorage, to speak to that question. She also referred the committee to a worksheet dated 4/5/94 (Attachment A, copy on file) showing the 1995 Capital budget and agency requests as best determined compared to the Governor's request. Using the Department of Safety as an example, it had estimated $10M for capital request even though nothing had showed up in their budget, and records showed an additional $59M of deferred maintenance backlog. Her point was that while there were known building maintenance needs, they were not being taken care of in the budget. In answer to a prior request by Co-chair Frank, Ms. Fenety referred to a memo from the Department of Military & Veteran Affairs dated March 30, 1994 (Attachment B, copy on file) showing operating shortfalls of $399,300 over the past four years. Again, Co-chair Frank asked how SB 369 related to the present process of maintenance on state buildings. He asked if DOT&PF was charged with the responsibility of maintenance except for the University of Alaska. Ms. Fenety agreed that DOT&PF was charged with the responsibility of maintenance, but in reality, each department or agency was responsible for budgeting its own maintenance. Co-chair Frank invited Loren Rasmussen, Chief, Design, Construction Standards, DOT&PF, to join the committee at the table. LOREN RASMUSSEN explained there was no integrated process for maintaining buildings. Most of the money obtained to do major repairs came through budgets of individual agencies. There was always a contest between operating and maintenance, and maintenance seemed to take the back seat. If an agency needed a program funded, generally speaking, maintenance would be deferred. These deferred maintenance items accumulated so that at some point, they become critical or the buildings were unusable. At that point, large amounts needed to be funded through the CIP process. He also pointed out that it was a budgetary problem. Some agencies were better than others at getting their budgets approved. He felt SB 369 was a good first step in creating a new process to begin maintenance on state buildings. Co-chair Frank asked how much of the maintenance money in DOT&PF was allotted for building maintenance not including operational expenses like heat and lights. Mr. Rasmussen said he did not know that amount. Co-chair Frank felt a clear picture of what the state was now spending was necessary in order to compare the old process with the new one created in SB 369. He wanted to know what existing revenues could be redirected to this fund for the important purpose of maintenance. He requested that Mr. Rasmussen report to the committee with at least an estimate of the amount currently being spent on building maintenance. He asked if there was any money elsewhere within the individual agencies in the operating budget available for maintenance. Mr. Rasmussen said that Co-chair Frank had keyed into one of the major problems of building maintenance. Some agencies or departments do very well at maintaining their buildings and others (because of the buildings, their budget, or location in outlying areas) found it very difficult. Senator Rieger asked if the agencies/departments that had taken good care of their buildings would feel resentful about paying an assessment that might bail out another department that had done poorly. He felt there should be some kind of incentive for those departments that had done well. Mr. Rasmussen agreed and said this legislation should provide a way to gear the assessment in relationship to how the building was being maintained. He also noted that there would never be a completely level playing field. There also could be different rates set for warehouses, courthouses, etc. but details had not been worked out as yet. Senator Rieger blamed the legislature in part because deferred maintenance was a way to make certain budgets fit and he could predict that happening to this fund also. He felt the legislature was trying to resolve a management issue by revising statutes. He felt DOT&PF or the Governor should enforce management responsibility for building maintenance rather than passing new legislation. Mr. Rasmussen said that there were state models to follow such as the state equipment fleet and it had been put in statute. Senator Sharp noted that the Governor had attempted an executive order to set up a separate building group last year and it did not pass. Mr. Rasmussen reiterated that SB 369 was a good first step even though he agreed that it would not happen instantaneously. The fund also could be funded by GO bonds beside the one percent construction assessment. Co-chair Frank voiced his preference for taking care of existing buildings by using existing levels of appropriation. His concern was that the committee would ask for x-number of dollars to take care of buildings from the budget and that amount of money would not be there. He wanted to know how the bill language could be strengthened so moneys could be allocated from existing levels of appropriation. Mr. Rasmussen cited the process that was being implemented with the Americans with a Disabilities Act as an example of the fund in this bill. He said it was a very complex process and the state needed to get buildings up to accessibility levels, etc. A fund, an oversight committee, and a prioritizing system was in place to inventory and prioritize the buildings that needed work. This process had not been completely successful but it was a start towards addressing the problem and matching moneys available to the program. He reiterated that money was not available for complete ADA compliance but it was a good first step toward compliance. Senator Rieger observed that the agencies that took the worst care of their buildings would be rewarded because they would be placed higher on the priority list. He said that happened when schools buildings were prioritized. Mr. Rasmussen felt the opposite was true. He said the agencies leasing from the equipment fleet that had not taken care of their vehicles were charged higher rates to cover maintenance costs. Co-chair Frank asked if a rate per square foot had been proposed. Ms. Fenety said there was no fiscal note and the committee would have a year to come up with such figures. Co-chair Frank thought he had heard 2 percent of a building cost would be needed to cover maintenance costs. He also asked why this was put under the Department of Administration. Ms. Fenety answered that the reason the responsibility was placed under the Department of Administration was because there was a "handshake" relationship between building occupancy in general and leasing operations, and this was more of a management function than maintenance. In answer to Co-chair Frank, Ms. Usera said that DOT&PF would still be contracted to do the work. She explained that there was a desire to model a centralized policy development and the responsibility of the Department of Administration was to provide government services with a centralized approach. Two years ago there had been much work done to accomplish a building maintenance program. It was apparent that having the separation of responsibilities of leasing and maintenance functions and no centralized policy made it a very haphazard process. She envisioned a process where there was an inventory of work needed, and a line drawn depending on what funding was available. At present, every department dealt with deferred maintenance differently. She reiterated that the Department of Administration would form a committee to inventory, prioritize, and then direct DOT&PF to do the work depending upon funding available. In answer to Senator Sharp, Ms. Usera said the extent of maintenance by the state depended upon the nature of the lease. Co-chair Frank asked if this would be handled with a charge- back system as was used for computers, highway working capital, etc. Ms. Usera said it would be a contribution based on square footage that would be associated with certain departments. This process would make the department conscious of the space it was using since there would be a cost associated with it. Anytime there was built-in management accountability, it was helpful. She agreed that the money would go into the fund and would not necessarily be a direct pay-back for services. It would also be possible that some departments could benefit more than their assessment if their needs were greater. Co-chair Frank asked how money would be pulled out of all the budgets already allocated for maintenance and put in this fund. Ms. Usera said there were two ways to fund it, maintenance money associated with the operating budget, and deferred maintenance as a capital appropriation. What she envisioned was that the money appropriated through the capital process for deferred maintenance would be put in this fund. There would be no individual appropriations for the Pioneer Homes or for a particular pet project. It would be the Administration's decision to fund the most important projects. Co-chair Frank said he must have misunderstood the bill. He thought each agency would have a per square foot charge within their operating budget that would be paid into the fund. Ms. Usera said it was her understanding there were three ways money could be appropriated into the fund. One of the funding mechanisms would be an assessment fee. The other two options would be bonding, and deferral of the one percent from new construction. Co-chair Frank asked Ms. Usera where the money comes from at present. Ms. Usera suggested that the money being appropriated for the Pioneer Homed deferred maintenance, for example, instead of a lump sum based on a list of projects, would be converted into a formula that would go into the fund. Co-chair Frank affirmed then that the only purpose of the assessment would be to determine the amount of money the legislature would appropriate either by bonding or by another mechanism into the maintenance fund. End SFC-93 #59, Side 2 Begin SFC-93 #61, Side 1 Ms. Usera went on to explain that the fiscal note for the Department of Administration would cover assessment of buildings and those projects would be prioritized. A determination of the optimal formula after this evaluation would be submitted to the legislature. The legislature would make the decision as to the appropriate funding level. For example, if $2.25 square foot assessment was too high for the budget and it approved $.75 a square foot instead, then that amount would go into the fund and would be spent on the top priority projects. Co-chair Frank said he was not opposed to the idea of a fund but did not see the mechanism that would be used to pull the money out of the budget when money was already being allocated for maintenance in the budget. Ms. Fenety said that currently the allocation of money for building maintenance did exist. In the operating budget, beside the normal dump the trash maintenance, there was a maintenance item for trying to keep up the building, such as fixing the leaks, etc. That money would come into the fund. She said maintenance was also allotted in the capital budget. Co-chair Frank asked her what mechanism in the budgetary process would be used to pull out the maintenance item from individual departments and the large amount from the Department of Transportation & Public Facilities. Ms. Fenety said that she envisioned the same mechanism as used in the highway working capital fund. Various departments previously owned their own vehicles. Now an assessed rate was put in individual department budgets for leasing vehicles. Co-chair Frank said that was exactly his question - how was the money going to be taken out budgetarily and placed in the fund? He said he did not see any mechanism in SB 369. Ms. Usera said that if this bill passed, it would be instructional to the Office of Management & Budget to build their budget or the governor's budget differently so it could scoop up that deferred maintenance money that was currently in various places in the budget. Co-chair Frank asked where that provision was in the bill. Ms. Usera said this bill would establish the building maintenance fund and the appropriation process would be used to finance it. She said the bill did not specifically mandate this but as in the charge-back system, if there was a mechanism, the budgets would be built on that system. Co-chair Frank requested the Department of Administration or Co-chair Pearce's office to create language that would require the Governor's budget to pull out that money for the fund. Ms. Usera agreed to do that but she wanted the committee to understand the power of appropriation. She said if the deferred maintenance fund was established, priorities would be set, and the Department of Administration would pay for deferred maintenance. If a department was low on the priority list and there was not enough money, for example, to fund a need in the Pioneer Home in Fairbanks, and that request was put in as an appropriation specific to that project, she did not see how the Governor or DOA could do anything to prohibit that request short of vetoing it. She saw this bill as a partnership between the executive and legislature branches for a make-sense management approach on how deferred maintenance was performed and the process associated with the appropriations and the funds. Co-chair Frank wanted to confirm that the money already in the budget could be identified rather than just pulling an amount out of DOT&PF's budget. Ms. Usera agreed to provide figures to Co-chair Frank regarding deferred maintenance, annual maintenance, heat & lights, etc. KIT DUKE, Facilities Manager, Administration, Alaska Court System, via teleconference from Anchorage, said that some of the information Co-chair Frank was requesting was available in the FY93 budget because of research done for that budget. She said an the executive branch budget had been broken down into the operating portion and annual maintenance, and it showed how much was spent on major maintenance. She asserted that this money needed to be collected over a period of time so that the life of major components of a building could be lengthened, such as a roof, or electrical system. One of the mechanisms that would exist if SB 359 was passed was the non-lapsing feature of the fund. Every year, an assessment of so many cents a square foot would go into that fund so when major maintenance projects needed to be done, the funds would be available. She felt this was the important component in preventing deferred maintenance in the future. The fourth component looked at how much money was in the capital budget every year which varied widely and went to many different agencies. She thought she could provide a good picture of where the money was in the budget. Every agency did not get sufficient money to do all four of those things. Co-chair Frank agreed with that statement. Co-chair Frank asked Mike Greany, Legislative Finance Division, to work with DOA & DOT&PF to provide real numbers in those areas discussed. Ms. Duke asked to speak to Senator Rieger's concern about how agencies were going to feel about being assessed. She agreed that rates should be set based on how well the departments maintained their buildings in the past, so the rate structure would reward people that took good care of their buildings. She felt it was important to take that into consideration. Co-chair Frank asked if anything in the bill addressed that situation. Ms. Fenety said the committee would be responsible for the assessed rate each year. The bill did not define how the rate was established. Co-chair Frank asked for language that would consider the department's maintenance record. Senator Kerttula warned about a trap that could happen. If an assessed fee was set too high, the department could rent more reasonably in the private sector than from the state. He said it was already happening with vehicle rentals. Co- chair Frank appreciated the insight and looked forward to hearing from the departments. TIM WILSON, Executive Director, Alaska State Council on the Arts, said he was not opposed to SB 359 in its entirety but to Sections 4 and 5 that appealed the 1 percent for art program. He said he was sympathetic to the enormous job of maintaining state buildings, but he felt repealing the 1 percent for arts would not be a big help. Last year's capital budget generated less than $300,000 for art projects, all of which were in public schools and would be exempt from this bill. He could speak at length to the importance of art and would not categorize public art as a luxury. He defined public art as a symbolic representation of who we were as Alaskans and that it helped us understand our place in the world in which we live, work and study. In recent years, the vast majority of public art had been in schools. Currently, the state was not building public buildings. The Arts Council believed the 1 percent for art was a fiscally responsible program. When the state had a robust budget and could afford to build buildings, then a modest portion of construction costs was given to developing public art. When the state could not afford to build buildings, no money was put into the percent for art program. Art would become and remain a permanent part of the legacy of that building. He felt it was an important program and would hate to see it repealed. Co-chair Frank asked if there was a move to change the one percent to one-half percent. Mr. Wilson said in rural schools the percent was one-half and one percent in urban areas. He said HB 311 would repeal the one percent for arts but it had remained in House Finance. In answer to Co-chair Frank, Mr. Wilson said that under current law any major renovation project more than $250,000 would be eligible for the 1 percent for art program. Co-chair Frank asked for a report on total money spent on public art over the last few years. Mr. Wilson said he did not have that information. Ms. Fenety said that she had access to that information for Co-chair Frank. Senator Sharp asked if $450,000 had been allotted to art from the Anchorage Court building project. Mr. Wilson said that it was one percent of the construction costs but he thought the court system was exempt from the art program. Kit Duke, Facilities Manager, Administration, Alaska Court System, via teleconference from Anchorage, said even though the Courts had not gone through the State Council on the Arts, one percent of the construction value of the project had been set aside for public art and that equated to about $350,000. In answer to Senator Sharp, she said she did not know if it was true that the Court System was exempt from the 1 percent for arts program. She understood that when the Court System did a project one percent would be set aside. Co-chair Frank asked Ms. Fenety to provide the committee with information about where the 1 percent for art applied. Senator Kelly asked if the purpose of SB 369 was to shift the 1 percent currently spent on art to the maintenance budget. He suggested instead that the arts program be suspended until the state caught up on its maintenance program. Some members of the committee commented it would take many years for that to happen. Ms. Fenety said Legislative Finance reported $1.5M had been spent on public art since the inception of the program. The committee suggested that some public art was budgeted and paid for under special projects. Co-chair Frank announced that SB 369 would be HELD in committee. Senator Kelly asked the bill sponsor to consider suspending the public art project for x-number of years rather than repealing it. At this time the committee took a short recess. Due to a recording machine malfunction, the next part of the meeting was not recorded and the following minutes were done with notes. CS FOR SENATE BILL NO. 190(JUD): An Act relating to income withholding and other methods of enforcement for orders of support; and providing for an effective date. Co-chair Frank announced that CSSB 190(FIN) work draft "U" was before the committee which incorporated previously ADOPTED in the March 30, 1994 meeting. Josh Fink, aide to Senator Kelly, spoke to amendment 3 which imposed a $5 fee instead of $1. Senator Kelly MOVED for adoption of amendment 3. No objection having been raised, the amendment was ADOPTED for incorporation within a Senate Finance Committee Substitute for the bill. Mr. Fink, spoke to amendment 4 which would require the agency to immediately return overpayments to the obligator, and the obligee would be liable to the state for any amount overpaid. MARY GAY, Director, Child Support Enforcement Division, Department of Revenue, came before the committee and asked that on page 4, line 25, the words "within five working days" be changed to "within fifteen working days." She felt that five days was not an adequate amount of time for the agency to respond. The committee agreed to change "five" to "fifteen." Senator Kelly MOVED for adoption of amendment 4 as amended. No objection having been raised, amendment 4 as amended was ADOPTED for incorporation within a Senate Finance Committee Substitute for the bill. Mr. Fink spoke to amendment 5 which gave credit to the obligor for medical and dental insurance, and educational payments towards child support payments. He also noted that prior to January 1992, adjustments were not made in child support court orders for those payments. MIKE HOSTINA, Deputy Ombudsman, testified, via teleconference from Fairbanks, that their office had received various complaints regarding this issue, especially when health insurance payments were increased and court orders had not made provisions for any adjustment. SHERRY GOLL, Lobbyist, Alaska Women's Lobby, testified in opposition to Amendment 5. She said that child support orders were reviewed fairly frequently and she did not agree that the provisions regarding the court in amendment 5 should be in state statutes. SUSAN MILLER, Manager, Special Projects, Alaska Court System, said that as early as tomorrow there could be a court decision that would effect provisions in Amendment 5. She was also opposed to the provisions in the amendment that applied to the court. Discussion was had by Senators Kelly, Sharp, Ms. Miller, Mr. Hostina, and Donna Page, Senior Hearing Officer, Department of Revenue, regarding the court and agency responsibilities as outlined in amendment 5. The committee agreed to amend amendment 5 by removing all reference to the courts. The words "and consistent with" were added to Section 23 in amendment 5. (These words were found to be redundant as legal services advised the committee that the words "to the extent of" already found in the amendment took care of the concern that the credit would be consistent with the percent of the credit as allowed in the child support order.) Senator Kelly MOVED for adoption of amendment 5 as amended. No objection having been raised, amendment 5 as amended was ADOPTED for incorporation within a Senate Finance Committee Substitute for the bill. DONNA PAGE, Senior Hearing Officer, Department of Revenue, said the Child Support Enforcement Division had requested amendment 6 because there were situations where children were given a monthly stipend because the obligor was disabled and then his social security payments might be attached for child support. When the child support order was computed, it was not taken into consideration that the children were already being taken care, for example, by a social security payment. This amendment would require the agency to take into consideration the fact that the child(ren) was already being taken care of and the obligor would not have his/her wages attached. Senator Jacko MOVED for adoption of amendment 6. No objection having been raised, amendment 6 was ADOPTED for incorporation within a Senate Finance Committee Substitute for the bill. Co-chair Frank raised the question regarding Section 26 that if a person would fail to honor a child support order they would be liable to the obligee in an amount equal to 100 percent of the amount ordered withheld. He felt that was excessive especially if it was an unintentional error. Discussion was had by Mary Gay, Co-chair Frank, and Senator Sharp regarding the penalty. The word "intentionally" was added to Section 26 after the words "of the state that" as amendment 7. No objection having been raised, amendment 7 was ADOPTED for incorporation within a Senate Finance Committee Substitute for the bill. Ms. Gay reiterated her concern that this bill pass this session because of federal regulations. Senator Sharp MOVED for passage of CSSB 190(FIN) as amended from committee with individual recommendations. No objections having been raised, CSSB 190(FIN) as amended was REPORTED OUT of committee with individual recommendations, and a zero fiscal note for the Alaska Court System, and a fiscal note for the Department of Revenue in the amount of $109.0. Co-chair Frank signed "do pass." Senators Jacko, Rieger, and Sharp signed "no recommendation." CS FOR SENATE JOINT RESOLUTION NO. 36(JUD): Proposing amendments to the Constitution of the State of Alaska requiring a runoff election when the candidates for governor and lieutenant governor obtaining the greatest number of votes at the general election do not receive more than 40 percent of the votes cast, and changing the term of office of the governor and the lieutenant governor. Scheduled but not heard. SENATE BILL NO. 363: An Act making appropriations for capital project matching grant funds and for capital projects; and providing for an effective date. Scheduled but not heard. Rescheduled for April 12, 1994. ADJOURNMENT The meeting was adjourned at approximately 10:08 a.m.