Legislature(1993 - 1994)

05/10/1994 10:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          May 10, 1994                                         
                           10:10 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-94, #88, Side 1 (000-end)                                                
  SFC-94, #88, Side 2 (575-end)                                                
  SFC-94, #90, Side 1 (000-542)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-chair Drue Pearce  convened the meeting  at approximately                 
  10:10 a.m.                                                                   
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Kelly,                 
  Kerttula, Rieger,  and Sharp  were present.   Senator  Jacko                 
  arrived as the meeting was in progress.                                      
                                                                               
  ALSO   ATTENDING:      Senator    Adams;   Senator   Taylor;                 
  Representative  Grussendorf;  Representative  Olberg;  Nancy                 
  Slagle, Director of Budget Review,  Office of Management and                 
  Budget;  Wendy   Redman,  Vice   President  for   University                 
  Relations,  University   of  Alaska;  Ron   Lind,  Director,                 
  Administrative Services, Dept.  of Transportation and Public                 
  Facilities; Duane Guiley, Director, School Finance, Dept. of                 
  Education; Bob  Poe, Director,  Division of Information  and                 
  Administrative    Services,    Dept.     of    Environmental                 
  Conservation;  Mike  Greany,  Director, Legislative  Finance                 
  Division; Dana  LaTour and Susan  Sorensen, fiscal analysts,                 
  Legislative Finance Division; and aides to committee members                 
  and other members of the legislature.                                        
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 441 -  An Act making, amending, and repealing capital and                 
            operating  appropriations;  and  providing for  an                 
  effective           date.                                                    
                                                                               
            Extensive   discussion   was   had  and   numerous                 
            amendments were adopted.   SCS CSHB 441  (Finance)                 
            was REPORTED  OUT of  committee with  a "do  pass"                 
            recommendation.                                                    
                                                                               
  HB 455 -  APPROP: GOVERNOR'S SUPPLEMENTAL                                    
                                                                               
            Discussion  was  had   and  two  amendments   were                 
            adopted.  SCS CSHB 455  (Finance) was REPORTED OUT                 
            of committee with a "do pass" recommendation.                      
                                                                               
                                                                               
  HB 441 -   ACT MAKING,AMENDING,AND  REPEALING CAP. AND  OPT.                 
  APPROPS.                                                                     
                                                                               
  Upon  convening  the   meeting,  Co-chair  Pearce   directed                 
  attention  to  CSHB  441  (Fin)am  and  noted  a  number  of                 
  amendments:                                                                  
                                                                               
  Amendment No. 1                                                              
                                                                               
  Co-chair Pearce advised that Amendment No. 1 was proposed by                 
  the  administration.    NANCY  SLAGLE,  Director  of  Budget                 
  Review, Office of Management and  Budget, explained that the                 
  amendment  would  reappropriate  the  unexpended  $1,094,439                 
  balance of  an old DOTPF  project for partial  completion of                 
  the Natural Sciences Building at  the University of Alaska.                  
                                                                               
                                                                               
  It  also  reappropriates  balances  from  three  other DOTPF                 
  projects for completion of the new  Tok School.  Funding for                 
  the   school  consists  of  $142,445  from  statewide  space                 
  planning,  $126,030 from  facilities planning,  and $124,791                 
  from the Kuskokwim Delta regional transportation study for a                 
  total of $393,267.                                                           
                                                                               
  Senator Frank  MOVED to  insert the  word "partial"  between                 
  "for" and "completion"  in language relating to  the Natural                 
  Science building.   The reappropriation  would thus be  made                 
  "to  the University of Alaska  for partial completion of the                 
  Natural Science building.                                                    
                                                                               
  Senator Kelly questioned whether moneys to be reappropriated                 
  dated from  past appropriations or  were new moneys.   Nancy                 
  Slagle attested to the fact  that $1,094,439 of the original                 
  $1,350,000 DOTPF appropriation remains unexpended.                           
                                                                               
  Senator Rieger inquired concerning the cost of completion of                 
  the Natural Science building.   WENDY REDMAN, Vice President                 
  for University Relations, University of Alaska, advised that                 
  the  legislature  funded  $22 million  of  the  original $27                 
  million  cost for  the building and  told the  University to                 
  come back for completion.   The cost to finish  the facility                 
  is   approximately   $5   million.     With   the   proposed                 
  reappropriation, the  University hopes  to open a  classroom                 
  and "a couple of labs."                                                      
                                                                               
  Co-chair  Pearce called  for  objections to  Senator Frank's                 
  amendment  to Amendment  No. 1.   No  objection having  been                 
  raised, the amendment to Amendment No. 1 was ADOPTED.                        
                                                                               
  RON  LIND,  Director,  Administrative  Services,  Dept.   of                 
  Transportation and Public  Facilities, came before committee                 
  in response to a question from  Senator Jacko concerning the                 
  status of projects slated to provide reappropriation funding                 
  for the Tok School.  Mr. Lind explained that funding derives                 
                                                                               
                                                                               
  from "old  statewide space  planning projects"  that are  no                 
  longer  active.  Senator  Jacko inquired  specifically about                 
  the  $220,000 for the  Kuskokwim Delta  study, and  Mr. Lind                 
  explained that  the $124,791  scheduled for  reappropriation                 
  reflects unused  planning funds.  Senator Jacko asked if the                 
  department was abandoning need for a regional transportation                 
  system in the area.   Mr. Lind said that he  could not speak                 
  to need for the project.  The department was merely asked to                 
  provide the general fund  balance and did so.   The original                 
  scope of  the work  was done.   The above-mentioned  balance                 
  remains.  It could be used for continued planning.                           
                                                                               
  Senator Kelly voiced his disbelief  that actual cash remains                 
  from projects  dating back to 1981.  Co-chair Pearce advised                 
  that cash remains from statewide projects back to 1977.                      
                                                                               
  Senator  Rieger  asked  if   the  Barnette/Illinois/Phillips                 
  Field/College Road project slated to provide funding for the                 
  Natural  Science  Building  had been  completed.    Mr. Lind                 
  answered affirmatively.  He explained  that it was a federal                 
  construction project.   Additional portions  of the  project                 
  may be  undertaken in the future,  but they will be  part of                 
  the "regular federal construction program . . . ."                           
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment  No.  1.    Senator  Jacko OBJECTED,  advising  of                 
  continued need for  a regional  transportation study in  the                 
  Kuskokwim Delta.   The motion CARRIED  on a vote  of 5 to  2                 
  (Senators Jacko and Kelly objected), and Amendment No. 1 was                 
  ADOPTED. (See page 5 of these  minutes for further action on                 
  this amendment.                                                              
                                                                               
  Amendment No. 2                                                              
                                                                               
  Co-chair Pearce explained that Amendment  No. 2 was proposed                 
  by the  Office of  Management and  Budget.   The House  used                 
  lapsing  moneys from Arctic Power  for public radio but tied                 
  the two together.   The Office of Management and  Budget has                 
  asked that the appropriations be separated in order for each                 
  to  stand  on  its own  merits.    Senator  Sharp MOVED  for                 
  adoption of Amendment No.  2.  Co-chair Pearce called  for a                 
  show of hands.  The motion FAILED on a vote of 3 to 4.                       
                                                                               
  Amendment No. 3                                                              
                                                                               
  SENATOR ADAMS  explained that  the $5,000,000  appropriation                 
  would  fund a  portion of  the reconstruction  cost for  the                 
  Newtok    School   which   burned   down   in   early   May.                 
  Reconstruction  will  cost approximately  $10 million.   The                 
  district will  receive $3.5 million from insurance proceeds.                 
  The intent is to construct a  K-12 facility for the village.                 
  The Newtok school is number two  on the Dept. of Education's                 
  Priority  I  list.     Senator   Adams  urged  support   for                 
  construction of the school  to house the 94 students  in the                 
                                                                               
                                                                               
  area.                                                                        
                                                                               
  Co-chair  Frank  inquired  concerning  the  administration's                 
  approach  toward   solving  the  problem.     DUANE  GUILEY,                 
  Director, School Finance, Dept. of Education, explained that                 
  the Newtok High  School was totally  destroyed by the May  1                 
  fire,  and  the elementary  school was  partially destroyed.                 
  Insurance proceeds are  based on  replacement cost and  will                 
  rebuild the high school and refurbish the elementary school.                 
  There is potential  for the  state to save  $3.8 million  in                 
  reconstructing  the  two  schools as  one  K-12  facility by                 
  simultaneously  utilizing  insurance   proceeds  and   state                 
  revenue.                                                                     
                                                                               
  Further  discussion followed  between committee  members and                 
  Mr.  Guiley.   He  explained that  the elementary  school at                 
  Newtok is currently number two  on the department's priority                 
  list.  It is a former BIA school constructed in 1963  and is                 
  overcrowded  and out of compliance  with current codes.  The                 
  department  planned to  construct an elementary  addition to                 
  the high school.   In response  to a question from  Co-chair                 
  Pearce,  Mr.   Guiley  said  that  the  department  supports                 
  construction of a single  facility but does not support  the                 
  proposed fund source.                                                        
                                                                               
  Senator Kelly  voiced concern  that costs  for the  proposed                 
  school appear  to total  $100,000 per student.   Mr.  Guiley                 
  said that  the estimate  for replacement  of the  elementary                 
  school is $10.8 million.  Utilization of the same contractor                 
  to both rebuild the high school and refurbish the elementary                 
  school would reduce costs to $7 million.  Construction costs                 
  average slightly over $220.00 per square foot.                               
                                                                               
  Discussion of responsibility for insurance coverage followed                 
  between Mr.  Guiley and Senator  Kelly.  Mr.  Guiley advised                 
  that  the  Newtok  school board  had  adequate  insurance in                 
  accordance with statutes.                                                    
                                                                               
  Noting that  statewide moneys are  involved, Senator  Rieger                 
  suggested that, in the event the school is not  constructed,                 
  funding should  not  be  considered  district  discretionary                 
  reappropriation moneys in  future years.  He  then MOVED for                 
  adoption  of  the  following  intent   as  an  amendment  to                 
  Amendment No. 3:                                                             
                                                                               
       It  is  the intent  of  the legislature  that this                      
       appropriation   is   not   subject   to   district                      
       reappropriation.                                                        
                                                                               
  Co-chair Frank voiced  OBJECTION to the intent,  saying that                 
  the Governor should provide a plan for reconstruction of the                 
  school rather than registering opposition through staff from                 
  the Dept. of Education.  SHELBY STASTNY, Director, Office of                 
  Management  and  Budget,  advised that  the  issue  had only                 
                                                                               
                                                                               
  recently  been  raised.    The  administration has  not  yet                 
  developed  a  plan.   Mr.  Stastny  advised that  he  had no                 
  objection  to  the  proposed  fund  source  as long  as  the                 
  committee understands that more general funds will be needed                 
  in the future.   Earnings proposed for  reappropriation were                 
  to  be  used for  the  foundation  formula next  year.   Mr.                 
  Stastny  concurred  that  the  problem  at  Newtok  must  be                 
  rectified.   He voiced his  belief that  the Governor  would                 
  have no objection to Senator Adams' proposal.                                
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  the  foregoing intent as  an amendment  to Amendment  No. 3.                 
  The motion carried on a vote of  5 to 2, and the intent  was                 
  ADOPTED.                                                                     
                                                                               
  Discussion  followed between Co-chair  Frank and Mr. Stastny                 
  concerning  the department's  position on  the proposal  and                 
  whether or  not the  Governor would  be likely  to veto  the                 
  appropriation.                                                               
                                                                               
  Co-chair Frank requested that action  on Amendment No. 3  be                 
  HELD* to the bottom of the agenda.  No objection having been                 
  raised, IT WAS SO ORDERED.  (*See page 15 for further action                 
  on this amendment.)                                                          
                                                                               
  Amendment No. 1                                                              
                                                                               
  Co-chair Frank MOVED  to RESCIND  committee action  adopting                 
  Amendment No. 1.  No  objection having been raised, adoption                 
  of Amendment No. 1 was RESCINDED.  Co-chair Frank then MOVED                 
  to delete language relating to  the Kuskokwim Delta regional                 
  transportation study.  No objection  having been raised, the                 
  motion  CARRIED  and  reappropriation   of  funds  from  the                 
  Kuskokwim  Delta  regional transforation  study  was DELETED                 
  from Amendment No. 1.                                                        
                                                                               
  Co-chair  Frank then MOVED for  adoption of Amendment No. 1,                 
  as amended.  No objection  having been raised, Amendment No.                 
  1 was ADOPTED AS AMENDED.                                                    
                                                                               
  Amendment No. 4                                                              
                                                                               
  Co-chair Pearce advised that Amendment No. 4 was proposed by                 
  the Fairbanks delegation.  Co-chair Frank MOVED for adoption                 
  of  Amendment  No. 4.    No  objection  having been  raised,                 
  Amendment  No.  4  reappropriation  of  funds  for  Festival                 
  Fairbanks and Noyes Slough cleanup and upgrade was ADOPTED.                  
                                                                               
  Amendment No. 5                                                              
                                                                               
  Senator  Rieger  MOVED  for  adoption  of Amendment  No.  5.                 
  Senator Sharp OBJECTED.  Senator  Rieger explained that some                 
  residents  of  the  Sutton/Glennallen  area  object  to   an                 
  appropriation for the power  transmission intertie made last                 
                                                                               
                                                                               
  year.  Rather  than dispute  the merits of  the $35  million                 
  appropriation from the Railbelt energy fund, Amendment No. 5                 
  provides  additional flexibility  in  selection  of a  power                 
  project.  Senator  Rieger advised that both  preliminary and                 
  final studies  have made  clear there  are alternatives  for                 
  power generation in the area.   The amendment thus adds "and                 
  for  the  design  and  construction   of  the  Allison  Lake                 
  hydroelectric  project" as  an  alternative  that  could  be                 
  funded  by the  $35 million,  zero  interest loan.   Senator                 
  Rieger suggested that allowing flexibility represents a more                 
  "open-minded" attitude toward power needs.  Senator Kerttula                 
  acknowledged opposition to the proposed  intertie in part of                 
  the region.  He further noted that studies do  not "bear out                 
  the economics  of the  intertie."   Senator Rieger  stressed                 
  that the  proposed amendment  would not  impact last  year's                 
  division of funding.  The region remains entitled to the $35                 
  million,  zero  interest  loan.    Amendment  No.  5  merely                 
  provides the flexibility to consider  the Allison Lake hydro                 
  project as well.                                                             
                                                                               
  REPRESENTATIVE OLBERG came  before committee voicing concern                 
  that Amendment No.  5 appears  to give equal  status to  two                 
  projects that are  far from equal.   The intertie will  cost                 
  $2.6  million per  megawatt.   Allison Lake  will cost  $5.3                 
  million per megawatt.  Further, the intertie is connected to                 
  the Railbelt; Allison Lake is not.   The intertie will place                 
  several  million  dollars into  the  Railbelt for  purchased                 
  power;  Allison lake  will not.   Three  million  gallons of                 
  diesel will not be  burned in Glennallen if the  intertie is                 
  constructed, however,  diesel  will continue  to  be  burned                 
  without the intertie  since Allison  Lake would not  replace                 
  the  diesel generators.   There  is potential to  put energy                 
  back into the Railbelt system  through Solomon Gulch via the                 
  intertie.    Turbidity  has  the  potential to  destroy  the                 
  Solomon  Gulch hatchery.  The watershed  on the Allison Lake                 
  project is  5.8 square  miles and is  not always  adequately                 
  snowed upon.   The Allison Lake  project leaves no room  for                 
  expansion in the event  growth occurs in the area.   Senator                 
  Sharp  added  his  understanding  that  the tie  line  could                 
  potentially  offer  up to  over  five times  the deliverable                 
  kilowatt  capacity,  if insulated  and  upgraded at  a later                 
  time.   Allison Lake does  not contribute anything  of value                 
  toward the statewide power  grid, and it does not  allow for                 
  transfer  and exchange of existing power  sources or the mix                 
  of  gas,  hydro, coal,  and  liquid fired  generating units.                 
  Allison Lake would create another small generating site that                 
  is expensive to operate.                                                     
                                                                               
  Senator Rieger took  exception to the foregoing  assertions.                 
  Amendment No. 5 would only allow  the question to be decided                 
  in an  informed manner  by those  who understand  and manage                 
  utilities.    Legislators  should  not  be afraid  that  the                 
  original project might not  turn out, in the end,  to be the                 
  best project.                                                                
                                                                               
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment No. 5.  Amendment No. 5 FAILED on a vote of 2 to 5                 
  (Senators Rieger and Kerttula were in support).                              
                                                                               
  Amendment No. 6                                                              
                                                                               
  Senator Rieger MOVED for  approval of Amendment No. 6.   Co-                 
  chair Frank OBJECTED.  Senator Rieger attested to conference                 
  committee  action,  in  the FY  95  operating  budget, which                 
  targeted reductions at the University of Alaska,  Anchorage.                 
  He  then  questioned whether  it  was appropriate  to target                 
  reductions to one campus, particularly  for the WAMI program                 
  which brings grant  moneys to  the state.   Amendment No.  6                 
  would  maintain the  statewide  reductions  enacted  by  the                 
  conference  committee  report   but  would  undue   targeted                 
  reductions  for  the  Anchorage   campus.    Co-chair  Frank                 
  contended that  University regents should  set policy rather                 
  than  the  legislature.    He  suggested  that  addition  of                 
  requested  funding for  WAMI and  a Masters  of Social  Work                 
  program should be left to the regents.                                       
                                                                               
  End, SFC-94, #88, Side 1                                                     
  Begin, SFC-94, #88, Side 2                                                   
                                                                               
  Speaking  specifically to  WAMI,  Co-chair  Frank said  that                 
  University regents could allocate funding for the program if                 
  they determine that doing so is important.                                   
                                                                               
  Senator Kelly MOVED that the funding source for WAMI and the                 
  Masters of Social Work program set  forth in Amendment No. 6                 
  be changed from the general fund to moneys reappropriated to                 
  the  University  for  completion  of  the  Natural  Sciences                 
  building.  Co-chair Pearce voiced her understanding that the                 
  amendment to Amendment No. 6, as proposed by  Senator Kelly,                 
  would remove $360,700 from the $1,094,439 reappropriation in                 
  Amendment No. 1 and apply it to WAMI and the Masters program                 
  rather than the  Natural Science  building.  Co-chair  Frank                 
  OBJECTED.    Co-chair  Pearce asked  if  the  original DOTPF                 
  funding  was  statewide  or  discretionary  money  from  the                 
  Fairbanks delegation.   Nancy Slagle  responded that such  a                 
  determination would be impossible to make.                                   
                                                                               
  Co-chair Pearce  called  for  a  show of  hands  on  Senator                 
  Kelly's  amendment to Amendment No. 6.  The amendment FAILED                 
  on a vote of 1 to 6.                                                         
                                                                               
  Co-chair Pearce then called for a  show of hands on adoption                 
  of Amendment No. 6.  The amendment FAILED  on a vote of 3 to                 
  4 (Senators Kelly, Kerttula, and Rieger were in support).                    
                                                                               
  Amendment No. 6-A                                                            
                                                                               
  Senator  Rieger  MOVED  for  appropriation  of  $100,000  in                 
                                                                               
                                                                               
  general funds for  WAMI.  Senator  Kelly voiced support  for                 
  the program but  lack of support  for use of general  funds.                 
  Co-chair Frank  advised of conference  committee discussions                 
  wherein it was  learned that the  House reduction of  $700.0                 
  would  be disastrous  to  both the  WAMI  program and  other                 
  classes  taught  by   WAMI  instructors.     The  conference                 
  committee  sought  to  discontinue the  WAMI  program.   The                 
  response from the  University was  that reduction of  $200.0                 
  would eliminate WAMI.   The remaining $500.0  would continue                 
  efforts  by  WAMI  instructors  in   other  programs.    The                 
  conference committee was somewhat inconsistent in  accepting                 
  a  compromise   House  proposal  for  an   arbitrary  $100.0                 
  reduction.   Co-chair Frank  disagreed with  use of  general                 
  funds  for the  program.    Senator  Rieger  said  that  the                 
  proposed  funding  was  no different  than  other amendments                 
  before committee,  it  would simply  utilize  general  funds                 
  rather than a "fifteen-year-old lapse."                                      
                                                                               
  Senator Rieger subsequently MOVED  to withdraw Amendment No.                 
  6-A.   No objection  having been  raised, IT  WAS WITHDRAWN.                 
  (See page 15 (Amend. No. 14) for WAMI funding.)                              
                                                                               
  Amendment No. 7                                                              
                                                                               
  Senator Rieger advised that he would not offer Amendment No.                 
  7  relating to a $115,000 general  fund appropriation to the                 
  Dept. of Natural Resources for Chugach State Park, Glen Alps                 
  Road access, maintenance, and improvements.                                  
                                                                               
  Amendment No. 8                                                              
                                                                               
  Co-chair Pearce explained  that Amendment No. 8  which would                 
  reappropriate  the   unobligated  balance  of  some   FY  84                 
  appropriations to  the Dept.  of Environmental  Conservation                 
  for  purchase  of  laboratory  equipment  and  supplies  was                 
  proposed by the administration.  BOB POE, Director, Division                 
  of  Information  and   Administrative  Services,  Dept.   of                 
  Environmental Conservation, advised that as  of April 13 the                 
  department  drinking water  lab  was placed  on  provisional                 
  certification by EPA because of lack  of key equipment.  The                 
  state  lab certifies  nine  of the  twelve  private labs  in                 
  Alaska to  conduct public drinking  water studies.   When HB
  441   was  in   House   Finance,   the   department   sought                 
  reappropriation  of three appropriations from FY  84.  It is                 
  not  clear  whether  the   projects  were  discretionary  or                 
  advanced  by the  administration.   The  reappropriation was                 
  changed in  the House  to allocate  funds for  the Fairbanks                 
  Health  Center.  Discussions  with both the  city manager of                 
  Fairbanks and the  borough mayor indicate that  only $93,000                 
  is needed for  the center.   The department  is thus  asking                 
  that the balance be used to acquire the necessary laboratory                 
  equipment   to   maintain  certification.      Without  that                 
  certification, private  labs will  have to  be certified  by                 
  either the EPA or  facilities outside of Alaska.   That will                 
                                                                               
                                                                               
  add  considerably to  costs and  may curtail  the  extent of                 
  their testing.                                                               
                                                                               
  In  response to  a  question  from  Senator Jacko,  Mr.  Poe                 
  explained  that reappropriated  funds  would  flow from  two                 
  completed projects in Fairbanks and one in Sand Point.                       
                                                                               
  Senator Rieger  OFFERED Amendment  No. 8.   Co-chair  Pearce                 
  called  for a show  of hands.   Amendment No. 8  FAILED on a                 
  vote of 2 to 5.                                                              
                                                                               
  Amendment No. 9                                                              
                                                                               
  Co-chair  Pearce  advised  that  Amendment  No. 9  was  also                 
  proposed  by   the  Dept.  of   Environmental  Conservation.                 
  Senator Rieger  OFFERED Amendment  No. 9.   Co-chair  Pearce                 
  explained  that  Alaska  has signed  an  emergency  services                 
  agreement  and   an  agreement  to   conduct  nuclear  waste                 
  monitoring with states  in Eastern Russia.   Two "Chernobyl-                 
  type"  nuclear  plants are  located  in Eastern  Russia, and                 
  Alaska has  signed agreements  "to actually  respond."   The                 
  agreement to  conduct research and development of monitoring                 
  radionuclides and  contaminants  in Alaska  and  the  Arctic                 
  environment   was   signed   last  fall.      The   $250,000                 
  appropriation from  the oil and  hazardous substance release                 
  response fund, contained in Amendment  No. 9, would provided                 
  funding for that effort.                                                     
                                                                               
  Senator Kerttula voiced support for the amendment.  Co-chair                 
  Pearce advised that she had seen  photos of lakes in Eastern                 
  Russia  containing  radiation  pollution.    The  lakes  are                 
  contained  by  weakening  earthen  dams  that  could release                 
  radiation into the  Arctic Ocean and ruin  Alaska fisheries.                 
  The above-noted  project would  also determine  how to  stop                 
  that release.                                                                
                                                                               
  In response to a question from  Senator Kelly, BOB POE again                 
  came before committee.  He  explained that requested funding                 
  would flow from  the (3-cent) prevention account  within the                 
  response fund.                                                               
                                                                               
  Discussion  followed  among committee  members  and  Mr. Poe                 
  concerning the  separation of prevention and response moneys                 
  within the oil and hazardous substance release response fund                 
  as  well as Legislative Budget and Audit funding of programs                 
  between Alaska and the Russian coast.                                        
                                                                               
  Co-chair  Frank  posed  questions  concerning  state  versus                 
  federal government responsibility for protection of national                 
  borders.   Mr. Poe advised that the Russian rapid assessment                 
  project, approved by  LBA, was federally funded.   Alaska is                 
  the only state likely to be impacted by nuclear contaminants                 
  in Eastern Russia.                                                           
                                                                               
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment No. 9.  The amendment FAILED*  on a vote of 3 to 4                 
  (Senators  Kerttula, Pearce,  and Rieger  were in  support).                 
  (*See page 11 for action subsequently ADOPTING Amendment No.                 
  9.)                                                                          
                                                                               
  Amendment No. 9-A                                                            
                                                                               
  Senator  Kerttula MOVED for adoption of Amendment No. 9-A by                 
  Senator Rieger.  Senator Rieger explained that the amendment                 
  would  reappropriate moneys  from  a Fireweed  Lane  project                 
  opposed by local  neighborhoods and utilize the  funding for                 
  Seward Highway safety turnouts.                                              
                                                                               
  Both Co-chair Pearce and Senator Kelly questioned whether or                 
  not   funding  within  the   repealer  had  previously  been                 
  allocated  elsewhere.    NANCY SLAGLE,  Director  of  Budget                 
  Review, Office of  Management and Budget, again  came before                 
  committee.     She   voiced  her   understanding  that   the                 
  reappropriation relates  to  federal  funds  that  have  not                 
  otherwise  been  reauthorized.   The  funds cannot  be spent                 
  without approval of  Anchorage AMATS.   Senator Rieger  said                 
  the proposed  reappropriation  reflects one  of three  steps                 
  needed to construct  a federally  funded highway project  in                 
  Anchorage.                                                                   
                                                                               
  In  response to a  question from Co-chair  Pearce asking why                 
  Sec. 66 was included in the House bill, DEBORAH DRIVER, aide                 
  to  Representative MacLean,  came  before  committee.    She                 
  explained that  Representative Brown incorporated  repeal of                 
  the Fireweed Lane project because  residents in the district                 
  are opposed to it.   The Dept. of Transportation  and Public                 
  Facilities has included the project in its six-year-plan for                 
  the  past  three years  and intends  to  pursue it.   Repeal                 
  relates to authorization only.  No  funding is yet in place.                 
  Responding to further inquiry by Co-chair Pearce questioning                 
  lack of support for the original project by local residents,                 
  Senator Rieger explained that while the department described                 
  the  project as  "safety  upgrades," the  community  regards                 
  conversion  of  the  four-lane  road  to  three  lanes  as a                 
  downgrade.  Co-chair Pearce acknowledged correspondence from                 
  the community council opposing the department's center-turn-                 
  lane  project.   She then  called  for a  show  of hands  on                 
  adoption of Amendment No. 9-A.  The amendment was ADOPTED on                 
  a vote of 5 to 1 (Co-chair Pearce was in opposition, and Co-                 
  chair Frank was temporarily absent from the meeting).                        
                                                                               
  Amendment No. 10                                                             
                                                                               
  Senator Rieger MOVED for  adoption of Amendment No. 10.   He                 
  explained that, for  a number of years,  the legislature has                 
  grappled  with   proposed  construction  of  a   new  Alaska                 
  Psychiatric Institute  (API).  The  original proposal called                 
  for  a $90 million, 114-bed facility.  Legislators balked at                 
                                                                               
                                                                               
  the price, and  the proposal  has continually been  designed                 
  down.   The House took  the approach that  the per  bed cost                 
  should be no more than $300,000,  and the facility should be                 
  limited to  72 beds.  Senator Rieger  attested to conjecture                 
  within the mental health community as to size and need for a                 
  new facility.  The conflict  between the legislature and the                 
  department  has  been over  downsizing  and  reducing costs.                 
  Senator  Rieger  said  he  was  not  yet  convinced the  new                 
  facility  needs  72 beds,  but  he  stressed  that the  most                 
  important  thing to guard against  is the project becoming a                 
  "hole  in the  ground  which would  be the  start  of a  $90                 
  million  facility."    Amendment  No.  10  thus  limits  the                 
  facility to "no larger than 72 beds" and states that capital                 
  costs  shall  not  exceed  $28,961,992  (consisting  of  the                 
  $22,861,992  appropriation within  Amendment No.  10  and an                 
  earlier $6,100,000 appropriation).                                           
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment  No.  10.   Senator  Rieger's  motion  CARRIED and                 
  Amendment No. 10 was ADOPTED.                                                
                                                                               
  Co-chair Pearce next  directed that  the meeting be  briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 11:45 a.m.                                     
                     RECONVENE - 12:00 noon                                    
                                                                               
  Upon  reconvening  the  meeting,  Co-chair  Pearce  directed                 
  attention to the next amendment.                                             
                                                                               
  Amendment No. 11                                                             
                                                                               
  She explained that  the amendment to insert  "67" in capital                 
  project lapse language in  Sec. 76 would apply  AS 37.05.020                 
  lapse  provisions  to appropriation  of $550,000  in accrued                 
  interest (through June  30, 1995) from the Exxon  Valdez oil                 
  spill restoration fund  to the  Dept. of Transportation  and                 
  Public Facilities for  maintenance and  repair of oil  spill                 
  response equipment  storage facilities and  docks at Tatilik                 
  and Chenega.  Co-chair  Pearce referenced DOTPF construction                 
  of  docks in  both  communities.    Because  the  docks  are                 
  overbuilt for the size of  the villages, the communities are                 
  not  willing   to  assume  ownership  unless  assistance  in                 
  maintenance  and  operating  costs  is  provided.   Interest                 
  income  is  available to  establish a  fund  to be  used for                 
  operation and maintenance of the docks.                                      
                                                                               
  Amendment  No. 11 corrects  an oversight in  the House bill.                 
  It provides for a five-year rather than one-year lapse.                      
                                                                               
  Senator Kerttula MOVED for adoption of Amendment No. 11.  In                 
  response to a  question from Senator Jacko,  Co-chair Pearce                 
  explained that while neither community has sufficient harbor                 
  activity at this  time to support operation  and maintenance                 
                                                                               
                                                                               
  of the docks, there  is hope for future contracts  from both                 
  the marine highway system and Alyeska.   Amendment No. 11 is                 
  intended to assist the communities in the initial few years.                 
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment No. 11.   No objection having been raised,  it was                 
  ADOPTED UNANIMOUSLY.                                                         
                                                                               
  Amendment No. 9                                                              
                                                                               
  Senator Jacko MOVED  to rescind committee action  failing to                 
  adopt  Amendment No. 9.   No  objection having  been raised,                 
  prior committee action  was RESCINDED.   Senator Jacko  then                 
  MOVED  for  adoption  of  the   amendment.    Senator  Kelly                 
  OBJECTED, voicing his belief that the Dept. of Environmental                 
  Conservation received sufficient FY 95  funding to cover the                 
  $250,000 cost  of research and monitoring  for radionuclides                 
  and other contaminants in Alaska and the Arctic environment.                 
                                                                               
  Co-chair Pearce  called for  a show  of hands.   The  motion                 
  CARRIED on a vote of 6 to 1 (Senator Kelly was opposed), and                 
  Amendment No. 9 was ADOPTED.                                                 
                                                                               
  Amendment No. 12                                                             
                                                                               
  Co-chair  Pearce explained  that Amendment  No. 12  contains                 
  language  providing  supplementary  funding   for  municipal                 
  assistance and revenue sharing.                                              
                                                                               
  End, SFC-94, #88, Side 2                                                     
  Start, SFC-94, #90, Side 1                                                   
                                                                               
  Co-chair Pearce said  that a  spread sheet listing  unlapsed                 
  and   unobligated   general   fund  capital   appropriations                 
  available  for  reappropriation from  1977,  1979,  and 1981                 
  through  1990  was  in  the  process  of  being  copied  for                 
  distribution  to  members.    Unencumbered  amounts   to  be                 
  reappropriated total $3,636,100.  Addition of that amount to                 
  operating budget appropriations for municipal assistance and                 
  revenue sharing will  result in a  10% reduction from FY  94                 
  funding.     The  FY  95  operating  budget  effects  a  15%                 
  reduction.  Amendment No. 12 provides the additional funding                 
  needed to lower the reduction to 10%.                                        
                                                                               
  The  Co-chair  explained  that legal  service  drafters  are                 
  presently  working   on  actual  amendment   language.     A                 
  conceptual amendment could be adopted  by committee based on                 
  distributions  set forth on the aforementioned spread sheet.                 
  Co-chair   Pearce   directed  that   Amendment  No.   12  be                 
  temporarily set aside  pending arrival of the  spread sheet.                 
  (See pages 14 and 15 for adoption of Amend. No. 12.)                         
                                                                               
  Amendment No. 13                                                             
                                                                               
                                                                               
  Co-chair Pearce  referenced Sec.  69 of  the House bill  and                 
  explained that in light  of recent closure of the  pulp mill                 
  at Sitka, the city has requested forgiveness  of interest on                 
  its portion of the four-dam-pool  hydroelectric loan for the                 
  life of the  loan.  The city is current on both its interest                 
  and   principal  payments.     Sec.  69   provides  interest                 
  forgiveness through the year 2018, the remaining life of the                 
  loan.   Co-chair Pearce voiced  a preference  for a  shorter                 
  period  of forgiveness, directed  attention to  blank spaces                 
  within Amendment No.  13, and  proposed that forgiveness  be                 
  provided for two years (January  1, 1994, through January 1,                 
  1996). That would  forgive $1 million  in interest.  If  the                 
  economic downturn in Sitka continues at that time, the  city                 
  would have  the opportunity to return to the legislature and                 
  request further forgiveness.                                                 
                                                                               
  SENATOR ROBIN TAYLOR and REPRESENTATIVE BEN GRUSSENDORF came                 
  before committee.   Co-chair Frank  inquired concerning  the                 
  net impact of closure of the  mill.  Senator Taylor attested                 
  to  the uncertainty  of preliminary estimates  but suggested                 
  that closure would result in  a significant loss of  utility                 
  revenues of approximately 30%.   The city does not  yet know                 
  what the trickle  down effect  will be as  the impact  moves                 
  through the economy.  Since the early 1950s, Sitka has never                 
  suffered unemployment above 5%.  Unemployment is now 16% and                 
  continues to rise.   Closure of  the mill has also  impacted                 
  the tax base.  While the mill has agreed to continue  to pay                 
  taxes for a year or two, the tax rolls will be significantly                 
  impacted by loss of approximately 25% of the base                            
                                                                               
  In response to a question from Senator Jacko, Senator Taylor                 
  explained that  the city  would continue  to make  principal                 
  payments  on  the  $15  million  loan.    Interest  payments                 
  presently accrue to repayment of the loan fund--part of last                 
  year's energy package.  Interest reveue is part of the Dept.                 
  of  Community and  Regional  Affairs,  division  of  energy,                 
  operating budget and is used for  numerous projects.  If the                 
  interest income is not forthcoming,  the money would have to                 
  be  replaced  by  other  funds.     Senator  Jacko  inquired                 
  concerning what projects would suffer as a result of reduced                 
  interest payments.  Senator  Taylor advised that he did  not                 
  know.  Co-chair Pearce noted  that interest forgiveness over                 
  the remaining life  of the  loan, per Sec.  69, would  total                 
  $7.4 million.                                                                
                                                                               
  Senator Sharp voiced his willingness to provide  forgiveness                 
  for  "a  couple  of years  or  whatever  it  takes," but  he                 
  requested that information on profits made on power sales to                 
  the  mill be  made available prior  to the  next legislative                 
  session.   He acknowledged that large power contracts have a                 
  "very slim margin of profit."                                                
                                                                               
  As   additional   background   information,   Representative                 
  Grussendorf  explained  that  approximately $52  million  in                 
                                                                               
                                                                               
  municipal bonds have been  sold.  Sitka also received  a $15                 
  million power loan  and has paid  $6 million in interest  to                 
  date.  The  remaining balance is $12 million.   The city and                 
  borough  acknowledges its  obligation  for repayment  to the                 
  state.  When the bonds were sold, it was understood that the                 
  "dump  power" would  be  purchased by  the  mill (which  has                 
  ability to generate its own power).  The mill purchased dump                 
  power generated between 11:00 p.m. and  5:00 a.m. and paid a                 
  reasonable,  flat price for it.  Moneys in question are in a                 
  utilities   enterprise   fund.      Forgiveness  would   not                 
  necessarily reflect  upon the general  fund of the  city and                 
  borough.    Forgiveness  would assist  with  annual  utility                 
  operation  and  maintenance costs  of  $800,000 and  provide                 
  flexibility for payments on municipal  bonds.  Sitka floated                 
  its  bond issue  at  a time  when  other communities  sought                 
  grants.  With  cancellation of the 17-year  timber contract,                 
  there is no way another entity will consume "that power."                    
                                                                               
  Senator Kelly voiced  his understanding that since  the mill                 
  purchased  only  dump   power,  energy  revenues   were  not                 
  primarily generated by the mill.  Representative Grussendorf                 
  concurred.    He  added, however,  that  utility  rates have                 
  increased as have property assessments.   He asked that if a                 
  limitation is placed on the interest forgiveness, it be of a                 
  length that  would allow  the municipality  time to  adjust.                 
  Leniency has been given on a number of power projects.                       
                                                                               
  Discussion of educational funding for Sitka schools followed                 
  between committee members and Senator Taylor.                                
                                                                               
  Senator Sharp  OFFERED Amendment  No. 13  with a  three-year                 
  interest forgiveness period  through December 31, 1996.   It                 
  would thus cover calendar years 1994, 1995, and 1996.                        
                                                                               
  Senator Jacko voiced his understanding that reduced interest                 
  revenues would impact the 20% of power development revolving                 
  loan funds  flowing through  the four-dam-pool  fund to  the                 
  account for statewide power projects.                                        
                                                                               
  Discussion of Sitka's return of municipal airport operations                 
  and maintenance to  the Dept.  of Transportation and  Public                 
  Facilities  followed.                                                        
                                                                               
  Co-chair Pearce next advised that  the amount of forgiveness                 
  provided by the three-year period suggested by Senator Sharp                 
  would total $1,482,819.80.                                                   
                                                                               
  Discussion ensued  between Senator Kelly  and Representative                 
  Grussendorf regarding actions taken by the city of Sitka  to                 
  reduce   costs    in   response    to   reduced    revenues.                 
  Representative  Grussendorf  stressed  that an  $18  million                 
  annual payroll was  lost when  the mill closed.   That  loss                 
  does not  account  for  losses  that will  be  sustained  by                 
  vendors who provided goods and services  to the mill and its                 
                                                                               
                                                                               
  employees.  In  response to a  question from Senator  Sharp,                 
  Representative Grussendorf advised of a current property tax                 
  of  6  mills   but  added  that  his   assessment  increased                 
  $11,000.00.                                                                  
                                                                               
  Senator Kelly voiced support for  forgiveness for two rather                 
  than three  years.   Co-chair Pearce  called for  a show  of                 
  hands  on  Senator Sharp's  proposal  that Amendment  No. 13                 
  provide interest forgiveness for three  years.  The proposal                 
  was UNANIMOUSLY ADOPTED.                                                     
                                                                               
  Amendment No. 12                                                             
                                                                               
  Co-chair Pearce redirected  attention to Amendment No.  12--                 
  relating  to municipal  assistance and  revenue sharing--and                 
  noted distribution of an accompanying  spread sheet (copy on                 
  file  in  the  original bill  file  for  HB  441).   Senator                 
  Kerttula MOVED for adoption of listed reappropriation  items                 
  as a conceptual amendment.   Co-chair Pearce reiterated that                 
  reappropriated items total  $3,638,300.  She  then explained                 
  that capture of reappropriation amounts commences on page 12                 
  of the  spread sheet and continues forward  through Dept. of                 
  Education, state  museum  security (underlined  on page  1).                 
  She then referenced the $218.0 for Dept. of Corrections roof                 
  repair and renovation (page 3 of the tabulation) and advised                 
  that it was lined out in  error.  The $218.0 is included  in                 
  the reappropriation total.   Other  projects that have  been                 
  lined out with  appended sectional  notes have already  been                 
  reappropriated to the indicated sections within SCS CSHB 441                 
  (Finance).                                                                   
                                                                               
  Co-chair Pearce  advised that  a copy  of  the spread  sheet                 
  would be  attached to the bill  when it is delivered  to the                 
  Senate Secretary.  Legal  Services will draft the  final SCS                 
  CSHB 441 (Finance) with the appropriate repealers.                           
                                                                               
  In response to  a question  from Senator Kerttula,  Co-chair                 
  Pearce  said that a total of $3,636.1  had to be achieved to                 
  lower municipal assistance and revenue sharing reductions to                 
  10%.   The  actual total reappropriated on the  spread sheet                 
  is $3,638,300.  That  is approximately $22,000 in excess  of                 
  the amount needed for the 10% reduction.                                     
                                                                               
  Co-chair Pearce called for objections to  Senator Kerttula's                 
  motion  for  conceptual  Amendment No.  12.    Senator Jacko                 
  OBJECTED.   The Co-chair called  for additional  objections.                 
  None were forthcoming,  and conceptual Amendment No.  12 was                 
  ADOPTED.                                                                     
                                                                               
  Amendment No. 14                                                             
                                                                               
  Senator Rieger directed  attention to page  1 of the  spread                 
  sheet   accompanying  Amendment   No.   12,  and   MOVED  to                 
  reappropriate $100,000 of the  unencumbered $103.0 shown for                 
                                                                               
                                                                               
  SLA 90, Ch 208, Dept. of Health and Social Services, API, to                 
  cover  the  WAMI  shortfall.    Co-chair Pearce  called  for                 
  objections.  No objection having  been raised, Amendment No.                 
  14 was ADOPTED.                                                              
                                                                               
  Amendment No. 3                                                              
                                                                               
  Senator  Jacko MOVED  for  adoption of  Amendment No.  3, as                 
  amended  by  intent  language.    Senator   Kelly  OBJECTED,                 
  advising that the Newtok school  could be reconstructed from                 
  insurance proceeds.   Co-chair Pearce  called for a  show of                 
  hands.   The motion  CARRIED on a  vote of  6 to  1 (Senator                 
  Kelly was opposed), and Amendment No. 3 was ADOPTED.                         
                                                                               
  Co-chair Frank MOVED  that SCS CSHB 441  (Finance) pass from                 
  committee with  individual recommendations.   Senator  Kelly                 
  OBJECTED.  Co-chair Pearce called for  a show of hands.  The                 
  motion CARRIED  on  a vote  of  6 to  1 (Senator  Kelly  was                 
  opposed), and  SCS CSHB  441 (Finance)  was REPORTED OUT  of                 
  committee.  All  members signed the committee  report with a                 
  "do pass" recommendation with the exception of Senator Kelly                 
  who signed "no rec."                                                         
                                                                               
                                                                               
  HB 455 - APPROP: GOVERNOR'S SUPPLEMENTAL                                     
                                                                               
  Co-chair Pearce directed that CSHB 455 (Fin)am be brought on                 
  for  discussion and  referenced a  work draft  SCS CSHB  455                 
  (Finance) (8-GH2040\X, Cramer/Utermohle, 5/10/94).  Co-chair                 
  Frank further referenced a May 10, 1994, memorandum (copy on                 
  file) listing  reductions to the House bill reflected in the                 
  above  work  draft.    He  then enumerated  the  reductions.                 
  Speaking  to  selected, specific  reductions,  Senator Frank                 
  explained that the  reduction in  general relief medical  is                 
  intended to place additional pressure on the Dept. of Health                 
  and  Social  Services.   Funding  to the  Alaska Psychiatric                 
  Institute  was  reduced   by  the  amount  of   new  federal                 
  disproportionate  share  moneys  ($400.0).   The  Harborview                 
  Development Center request for certification was not funded.                 
  Fire suppression  was also  reduced by  ($400.0), since  the                 
  request  represents  an estimate  of  what might  be needed.                 
  Funding of $200.0  for Spring Creek Correctional  Center was                 
  deleted because new money  for new beds was not  included in                 
  the  operating   budget.     Deletion  of   $36.7  for   air                 
  quality/solid   waste   management  reflects   prior  intent                 
  language asking that the Dept. of Environmental Conservation                 
  cover  small appropriation items within its existing budget.                 
  Deletion  of  $163.9 for  Spring  Creek  Correctional Center                 
  relates  to settlement  of litigation  involving  the canine                 
  unit.     Co-chair  Frank   voiced  his  understanding  that                 
  department staff sought overtime  pay for voluntarily taking                 
  department  dogs  home   with  them  and  caring   for  them                 
  overnight. The Co-chair recommended  that the settlement not                 
                                                                               
                                                                               
  be funded.  The $50.0 reduction to family and youth services                 
  within  the Dept.  of Health  and Social  Services was  made                 
  because the supplemental request was  small in comparison to                 
  the overall department budget.                                               
                                                                               
  In his  concluding  remarks,  Co-chair  Frank  referenced  a                 
  proposed amendment by Senator Jacko  for funding for RATNET.                 
                                                                               
                                                                               
  Co-chair Frank  MOVED  for  adoption of  the  work  draft  X                 
  version of SCS CSHB 455 (Finance).  No objection having been                 
  raised, SCS CSHB 455 (Finance) was ADOPTED.   Co-chair Frank                 
  then MOVED  for adoption  of Amendment  No. 1  appropriating                 
  $55,000 in  general funds to the Dept. of Administration for                 
  operating costs of  the Rural Alaska Television  Network for                 
  the fiscal year ending  June 30, 1994.  No  objection having                 
  been raised,  Amendment No. 1  was ADOPTED.   Co-chair Frank                 
  then  MOVED,  as  Amendment  No.  2,  reinstatement  of  the                 
  $163,861  in  general funds  for  settlement of  canine unit                 
  overtime litigation.   Senator Rieger asked if  funding of a                 
  court  settlement  is  different  than   funding  for  labor                 
  agreements in that  the Dept. of  Corrections would have  to                 
  pay  the  settlement  even  if   the  legislature  does  not                 
  appropriate the  funds.   Co-chair Frank  concurred in  that                 
  understanding but  advised that he  would conduct additional                 
  research prior to a floor vote on the bill.  He acknowledged                 
  his preference  for denying  the funding.   Co-chair  Pearce                 
  voiced  her  understanding  that  the pending  motion  would                 
  reinstate  the  following Sec.  51  language from  the House                 
  bill:                                                                        
                                                                               
       The  sum  of  $163,861  is  appropriated  from the                      
       general fund to the  Department of Corrections for                      
       settlement of the canine  unit overtime litigation                      
       for the year ending June 30, 1994.                                      
                                                                               
  Senator  Sharp  voiced  his preference  for  removal  of the                 
  appropriation if the settlement is found to be something the                 
  state does not have to pay.                                                  
                                                                               
  Co-chair Pearce called for a show  of hands on Amendment No.                 
  2.  The motion CARRIED with no opposition, and the amendment                 
  was ADOPTED.                                                                 
                                                                               
  Co-chair Frank MOVED  that SCS CSHB 455 (Finance)  pass from                 
  committee  with  individual recommendations.    No objection                 
  having been raised, SCS CSHB  455 (Finance) was REPORTED OUT                 
  of committee with a unanimous "do pass" recommendation.                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  Co-chair  Pearce extended  her  thanks  and appreciation  to                 
  committee  members and  staff  for the  cooperative  working                 
  relationship  during the past two sessions.  The meeting was                 
                                                                               
                                                                               
  adjourned at approximately 1:15 p.m.                                         
                                                                               

Document Name Date/Time Subjects