Legislature(1993 - 1994)

04/09/1994 01:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          April 9, 1994                                        
                            1:00 p.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #65, Side 1 (000-end)                                                
  SFC-94, #65, Side 2 (end-000)                                                
  SFC-94, #67, Side 1 (000-250)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue  Pearce, Co-chair,  reconvened the  meeting at                 
  approximately 1:00 p.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to Co-chairs Pearce  and Frank, Senators Rieger,                 
  and Kelly were present.  Senators Sharp, Kerttula, and Jacko                 
  joined the meeting after it was in progress.                                 
                                                                               
  ALSO ATTENDING:  Senator Suzanne Little;  Commissioner Bruce                 
  Campbell, Department of  Transportation & Public Facilities;                 
  Ron Lind, Director,  Administrative Services, Department  of                 
  Transportation   &   Public  Facilities;   Roger  Allington,                 
  Planning  Director, Department  of  Transportation &  Public                 
  Facilities; Helvi Sandvik,  Deputy Commissioner,  Department                 
  of  Transportation   &  Public  Facilities;   Larry  Meyers,                 
  Director, Income  &  Excise Audit  Division,  Department  of                 
  Revenue; Fred  Fisher, fiscal  analyst, Legislative  Finance                 
  Division; representatives  of the media,  aides to committee                 
  members and other members of the legislature.                                
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 311:   An Act  authorizing a  credit against  the fishery                 
            resource  landing  tax  for certain  contributions                 
            made   by   taxpayers  not   harvesting  fisheries                 
            resources under a community development quota  and                 
            for contributions  based on fishery  resources not                 
            harvested  under   a  quota   made  by   taxpayers                 
            harvesting fisheries resources  under a  community                 
            development   quota,   amending   the  manner   of                 
            calculating  the  amount  available   for  revenue                 
            sharing   by  operation   of   this  credit,   and                 
            expediting   agency   review    of   the    credit                 
            applications under that tax; and  providing for an                 
            effective date.                                                    
                                                                               
            Larry  Meyers,  Director,  Income  & Excise  Audit                 
            Division, Department of Revenue, spoke to SB  311.                 
            Amendments 2 and  3 were  ADOPTED.  CSSB  311(FIN)                 
                                                                               
                                                                               
            was REPORTED OUT  of committee  with a "do  pass",                 
            and a zero fiscal note for Department of Revenue.                  
                                                                               
  SB 363:   An Act  making appropriations for  capital project                 
            matching grant funds and for capital projects; and                 
            providing for an effective date.                                   
                                                                               
            Commissioner Bruce Campbell;  Ron Lind,  Director,                 
            Administrative Services; Roger Allington, Planning                 
            Director; Helvi Sandvik, Deputy  Commissioner; all                 
            from  the Department  of  Transportation &  Public                 
            Facilities  came  before  the   committee  for  an                 
            overview of the department's capital budget.                       
                                                                               
  SENATE BILL NO. 363:                                                         
                                                                               
       An  Act  making   appropriations  for  capital  project                 
       matching  grant funds  and  for  capital projects;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce  invited Commissioner  Bruce  Campbell; Ron                 
  Lind,  Director,  Administrative Services;  Roger Allington,                 
  Planning Director;  Helvi Sandvik, Deputy  Commissioner; all                 
  from the  Department of Transportation  & Public  Facilities                 
  (DOT&PF) to  join  the  committee  for an  overview  of  the                 
  department's capital budget.                                                 
                                                                               
  COMMISSIONER  BRUCE  CAMPBELL  said  that  he  had  given  a                 
  briefing a month ago and would not repeat that presentation.                 
  He asked Co-chair Pearce how she  would like him to proceed.                 
  Co-chair Pearce  asked for a review of the separate programs                 
  and   how   those   related  to   the   seasonal   requests,                 
  authorizations  and  allocations.     She  noted   that  the                 
  legislature was uncomfortable with the way some projects had                 
  been authorized but never completed.                                         
                                                                               
  Mr. Campbell related  that the time  frame and cost of  many                 
  projects were determined  by factors exterior to  DOT&PF and                 
  the  state,  and  this  made  a realistic  forecasting  very                 
  difficult.   What had been done was  a forecast for the next                 
  two  construction  years  to the  best  of  the department's                 
  ability.    (He  referred to  the  binders  provided to  the                 
  committee.)                                                                  
                                                                               
  Discussion followed by Senators Rieger, Little, and Co-chair                 
  Pearce regarding phases of  authorization and the priorities                 
  of  various projects.   Senator Rieger stated  that he would                 
  prefer projects listed individually.  Co-chair Pearce agreed                 
  that authorization would be done by individual project.                      
                                                                               
  Mr.  Campbell  stated  that  if  allocations  were  done  by                 
  project, the over-appropriation of $1.3 billion would not be                 
  addressed, but would continue to grow.  He said October 1 to                 
                                                                               
                                                                               
  September 30 was the federal  time period for authorization,                 
  and,  if  a  project  was   delayed,  another  one  must  be                 
  authorized and available to fill that slot  or federal funds                 
  would  be lost.   Co-chair Pearce  said she  understood this                 
  problem but there was not a  consensus by the legislature to                 
  give DOT&PF a  single lump-sum appropriation.   Mr. Campbell                 
  offered  the  list  for  the  next  two  years  as  DOT&PF's                 
  limitation.  He  said he had no desire to pull a project out                 
  of no where and substitute it  for another.  Co-chair Pearce                 
  reiterated the  legislature's desire  to authorize  specific                 
  projects.    Mr.  Campbell  said  that  short  of  lying  to                 
  legislature,  it was  not possible  to project  specifically                 
  because of the complex process for projects.                                 
                                                                               
  In  answer  to  Senator   Rieger  regarding  the   Minnesota                 
  overpass,   Mr.  Campbell  observed   that  there  was  some                 
  misunderstanding but it had been planned only as  a railroad                 
  overpass.                                                                    
                                                                               
  Senator  Sharp  offered the  suggestion  that some  projects                 
  should  be de-authorized and  that would  help clean  up the                 
  over-authorization  of $1.3  billion.   Mr.  Campbell agreed                 
  with that  comment and  said the  department  had phrased  a                 
  request in the  budget to read "no  appropriation of federal                 
  funds"   so   the   department   would   "live   off"    old                 
  appropriations.   He said the department  was in the process                 
  of analyzing all its projects but it would take time.                        
                                                                               
  In  reference  to  Commissioner  Campbell's  remark,   ROGER                 
  ALLINGTON said specific  projects were not detailed  as yet.                 
  A list  of the  appropriations was  complete but  individual                 
  allocations had  not been  identified.   The department  had                 
  more  work to  do  on that  report.   Commissioner  Campbell                 
  pointed out some projects went back to 1976.                                 
                                                                               
  Co-chair  Pearce  asked  the  committee   to  bring  up  any                 
  questions as they went through  information presented in the                 
  binders.                                                                     
                                                                               
  HELVI SANDVIK, Deputy Commissioner, referred to the Corp. of                 
  Engineers Program that  showed an original request  of $6.9M                 
  reduced  by the  Governor's  request to  $3.2M.   Since  the                 
  department's  original request,  the Corp  of  Engineers had                 
  modified its expected  program for 1995, reducing  the match                 
  needed.  She expected $20M of matched funds for the Corp. of                 
  Engineers.   She said feasibility  studies could not be done                 
  at  the $3.2M  request  level which  was  $800,000 short  of                 
  needed funds.                                                                
                                                                               
  Discussion   followed   regarding   match  requirements   on                 
  projects.  Mr.  Allington said that historically,  the state                 
  had  funded  the match  for municipalities  but it  did vary                 
  depending on the project.   Mr. Campbell added that  a match                 
  also could be met by in-kind or other work rather than cash.                 
                                                                               
                                                                               
  In  reference to Larson Bay,  it was suggested that possibly                 
  the land  was donated or  some similar reason  accounted for                 
  the low match.  Several other projects were discussed.                       
                                                                               
  In regard to the  Sitka Harbor, Mr. Allington said  the city                 
  would have to  come up with  the additional money needed  to                 
  complete the project.                                                        
                                                                               
  In  regard to the Ketchikan shipyard, Ms. Sandvik said funds                 
  requested   would   provide    safety   and    environmental                 
  improvements needed to keep the shipyard operational for the                 
  short term.  It did not include any management fees or money                 
  for  utilities.   In  the  future, an  additional investment                 
  would need to  be made  to keep the  shipyard available  for                 
  commercial  use.    Co-chair  Pearce  stated  the  Ketchikan                 
  shipyard was a black  hole.  Mr. Campbell said  the shipyard                 
  was owned  by the state  and a  contractual arrangement  had                 
  been made on a lease basis with TY-MATT, Inc.  He hoped this                 
  lease would be  extended, but, if the commercial venture did                 
  not work out, he would propose closing the shipyard.                         
                                                                               
  Mr.  Campbell  said  the  Malaspina  was  in  repair  at the                 
  Ketchikan shipyard.  He felt the state had a vested interest                 
  to keep  the yard open  while that work  was completed.   He                 
  said  the  marine highway  vessel  maintenance was  a higher                 
  priority  than  keeping  the Ketchikan  shipyard  open,  and                 
  decisions  would be made after the budget was complete since                 
  all areas of the department were being cut.                                  
                                                                               
  Senator  Little strongly  suggested funding  the maintenance                 
  budget rather  than allocating funds to a  shipyard that may                 
  not stay open.   Mr.  Campbell said the  shipyard was  being                 
  tried as a  commercial venture and Ketchikan  hoped it would                 
  succeed for their  local economy's  sake.  Senator  Kerttula                 
  suspected that  if the state  had not put  the ferry  in for                 
  maintenance  at the  shipyard at  a  25 percent  increase in                 
  cost, the shipyard would not have  stayed open.  Ms. Sandvik                 
  quoted the current  director of  the Marine Highway  System,                 
  stating  there  was  sufficient  activity  to  support   the                 
  shipyard on its own and did not  have to be dependent on the                 
  Marine ferries.   In answer to Senator Kerttula, Ms. Sandvik                 
  believed that it cost approximately  $80,000 more to service                 
  the ferry in Ketchikan than down  south.  Mr. Campbell added                 
  that the department  was under  tremendous pressure to  keep                 
  work  in Alaska  but did  not  appreciate criticism  of that                 
  decision when local hire did increase the cost to the state.                 
                                                                               
  Discussion continued  by Senators Rieger,  Little, Kerttula,                 
  Co-chair  Pearce  and Mr.  Campbell regarding  the Ketchikan                 
  shipyard.   Mr. Campbell pointed out that the other shipyard                 
  used  by  the state  was  Seward  and a  certain  offset was                 
  allowed  for  local hire.    It  was noted  that  the Seward                 
  shipyard  only  could  service  small  vessels  which   only                 
  included  the  Tustimena and  Bartlett.   The  other ferries                 
                                                                               
                                                                               
  would  have to  go south  for maintenance  if  the Ketchikan                 
  shipyard closed.                                                             
                                                                               
  End SFC-93 #65, Side 1                                                       
  Begin SFC-93 #65, Side 2                                                     
                                                                               
  Ms. Sandvik agreed to  provide more complete figures  to the                 
  committee regarding expenses by the Ketchikan shipyard.                      
                                                                               
  Discussion  then  turned  to   Facilities  Energy  and  Code                 
  Upgrades  which  the  Governor  cut  from $2.5M  to  $1.25M.                 
  Senator Rieger requested a detailed list for the $2.5M.  Ms.                 
  Sandvik referred  the committee  to  page 7  for a  proposed                 
  list.                                                                        
                                                                               
  In answer to  Senator Rieger,  Mr. Campbell  said the  state                 
  office building elevator project had to do with  providing a                 
  safe exit  on  the 9th,  10th and  11th floor  of the  state                 
  office building.                                                             
                                                                               
  Ms.   Sandvik  explained   the  statewide   advance  project                 
  definition  for up-front  work needed  to  determine project                 
  feasibility was  preparation of cost  estimates, preliminary                 
  environmental  work,  minor   reconnaissance  studies,   and                 
  definitions  of  project  scopes.    In answer  to  Co-chair                 
  Pearce, she said she did not have a list of projects but one                 
  example  was  a request  by  a  community for  a  cross wind                 
  runway.                                                                      
                                                                               
  Ms.  Sandvik  said  that  railroad  planning would  identify                 
  potential  local rail  freight assistance  projects.   Under                 
  this program, each state received $36,000 a year to identify                 
  projects.                                                                    
                                                                               
  In  answer to Co-chair Pearce, in  regard to equipment fleet                 
  replacement, Mr. Sandvik said that  agency leases would show                 
  up in the agency's  budget.  Co-chair Pearce asked  for list                 
  of  all  leased  vehicles from  the  state  equipment fleet.                 
  Senator Kerttula thought  an audit would  be a good idea  in                 
  this area.  Mr. Campbell said that some agencies could lease                 
  without going through this program.                                          
                                                                               
  Ms.  Sandvik said  that  a  Federal  Transit  Administration                 
  Grants appropriation allowed the department to apply for and                 
  receive   annual    grants   from   the    Federal   Transit                 
  Administration  on behalf  of  local governments  or private                 
  non-profit  groups engaged  in transporting  the elderly  or                 
  disabled.  She noted that Anchorage received a direct grant.                 
  Section 18 covered operating costs.                                          
                                                                               
  Ms. Sandvik  said non-routine Maintenance  Emergency Repairs                 
  (agency requested $1M and the  Governor allowed $.5M) funded                 
  projects to  replace DOT&PF facilities  damaged by  weather,                 
  winter floods, etc.  Co-chair Pearce requested the amount of                 
                                                                               
                                                                               
  the  balance  left  in  that   account.    Senator  Kerttula                 
  suggested some  kind of donation  per employee to  fund this                 
  emergency fund.                                                              
                                                                               
  Discussion followed on appropriations by region.                             
                                                                               
  In regard to the  Alaska Marine Highway System,  Ms. Sandvik                 
  said   this   appropriation   would  fund   the   repair  or                 
  replacement, preservation, and  improvements of the systems,                 
  ferries and terminals.   Projects  were identified for  1994                 
  and 1995.   Senator  Kelly questioned  the high  price of  a                 
  baggage  cart,  $75,000.    Ms.  Sandvik agreed  to  provide                 
  details.   Discussion  followed by Senator  Sharp, Co-chairs                 
  Pearce,  and  Frank regarding  various projects  and related                 
  federal  matching  funds.    It  was noted  by  Commissioner                 
  Campbell  that  routine  maintenance  was  not eligible  for                 
  federal funds.                                                               
                                                                               
  In answer  to Senator  Rieger, RON  LIND explained that  the                 
  portion  of  the  front  section  that  said  "reduction  in                 
  authority" referred to  old remaining  balances of  matching                 
  funds and to the match only.   He went on to explain that  a                 
  lump sum appropriation would work  better for the department                 
  than the very complicated system in place now.                               
                                                                               
  In answer  to Senator Sharp,  the Supreme Court  decision on                 
  the Dalton Highway had not been made as yet.                                 
                                                                               
  Discussion was  had by  Co-chair Frank,  Mr. Allington,  and                 
  Commissioner Campbell regarding the roof on the Haines ferry                 
  building, and the life span of roofs in general.                             
                                                                               
  In answer to Co-chair Pearce, Commissioner Campbell said the                 
  department  had  about $130M  of  remaining 1994  funds that                 
  would partially fund  the 1994 list.   These funds plus  new                 
  funds would fund the construction list.  He noted that ISTEA                 
  carried more pressure than in prior years and six management                 
  systems  must be in place to qualify  for federal funds.  He                 
  said that he  was not able  to tell the committee  realistic                 
  numbers  for  various projects  because  of all  the factors                 
  involved.                                                                    
                                                                               
  Co-chair  Pearce  announced that  SB  363 would  be  HELD in                 
  committee.                                                                   
                                                                               
                          Recess 2:30pm                                        
                        Reconvene 3:00pm                                       
                                                                               
  End SFC-93 #65, Side 2                                                       
  Begin SFC-93 #67, Side 1                                                     
                                                                               
  SENATE BILL NO. 311:                                                         
                                                                               
                                                                               
       An  Act   authorizing  a  credit  against  the  fishery                 
       resource landing tax for certain contributions  made by                 
       taxpayers  not harvesting  fisheries resources  under a                 
       community development quota and for contributions based                 
       on fishery resources  not harvested under a  quota made                 
       by  taxpayers harvesting  fisheries  resources under  a                 
       community  development  quota, amending  the  manner of                 
       calculating the amount available for revenue sharing by                 
       operation of this credit, and expediting  agency review                 
       of  the   credit  applications  under  that   tax;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce  announced  that  SB  311  was  before  the                 
  committee.  She said that  discussion had suggested limiting                 
  the use of the  tax credits for programs already  in statute                 
  and the new one added by SB 311.  The credits would still be                 
  available for  training, scholarships,  and awarding  grants                 
  for research  projects  which was  the  primary use  of  the                 
  funds.  She said this option was contained in amendment 2 if                 
  anyone wished to offer it.                                                   
                                                                               
  Senator Sharp  MOVED amendment 2.  Senator  Jacko noted that                 
  it was commendable to get people involved with the fisheries                 
  by  training and  scholarships but  there was  much more  to                 
  commercial  fishing  than scrubbing  a  deck.   Allowing the                 
  money to be used for other options like  processing projects                 
  would be beneficial even though it was not a large amount of                 
  money.                                                                       
                                                                               
  Co-chair  Pearce was opposed  to non-profit groups receiving                 
  state dollars for  a tax credit  and then, in turn,  loaning                 
  out those  tax dollars and receiving interest on that money.                 
  She  said  there were  loan  programs already  in existence.                 
  Senator Jacko said there were many needs in this area.                       
                                                                               
  Co-chair Pearce called for  a show of hands and  amendment 2                 
  was ADOPTED on a vote of 3 to 1 (Co-chairs Pearce, Frank and                 
  Senator Sharp were in support.  Senator Jacko was opposed.).                 
                                                                               
  Co-chair Pearce invited Larry Meyers to join the members  at                 
  the table to speak to amendment 3.                                           
                                                                               
  LARRY  MEYERS,  Director,  Income &  Excise  Audit Division,                 
  Department of Revenue, said SB 311 provided a public hearing                 
  to grant a credit.  The  department proposed all language be                 
  deleted in Section  1, page 2,  line 5-11, and replace  with                 
  the wording in amendment 3.                                                  
                                                                               
  Senator Jacko MOVED amendment 3.  No objection being  heard,                 
  it was ADOPTED.                                                              
                                                                               
  Senator  Jacko  MOVED  for  passage  of CSSB  311(FIN)  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 Revenue.                 
  Co-chairs Pearce, Frank, Senators Kelly and Jacko signed "do                 
  pass."  Senator Sharp signed "no recommendation."                            
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 3:30 p.m.                         

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