Legislature(2003 - 2004)

03/03/2003 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 03, 2003                                                                                      
                              9:03 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 12,  Side A                                                                                                            
SFC 03 # 12,  Side B                                                                                                            
SFC 03 # 13,  Side A                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Lyda  Green convened the meeting at approximately  9:03 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Robin Taylor                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Ben Stevens                                                                                                             
                                                                                                                                
Also Attending: KAREN MORGAN,  Director, Division of Administration,                                                          
Department  of Public Safety;  LARRY PERSILY,  Deputy Commissioner,                                                             
Department   of  Revenue;  NANCY   SLAGLE,  Director,  Division   of                                                            
Administrative  Services,  Department of Transportation  and  Public                                                            
Facilities; CAPTAIN GEORGE  CAPACCI, General Manager, Marine Highway                                                            
System,  Department of Transportation  and  Public Facilities;  JOHN                                                            
CRAMER, Director,  Division of Administrative  Services,  Department                                                            
of Military  and Veterans Affairs;  DENISE LICCILOI, Administrative                                                             
Services Manager,  Division of Administrative  Services,  Department                                                            
of  Military   and  Veterans   Affairs;   ELMER  LINDSTROM,   Deputy                                                            
Commissioner, Department of Health and Social Services                                                                          
                                                                                                                                
Attending   via  Teleconference:   There   were  no  teleconference                                                           
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 75-SUPPLEMENTAL APPROPRIATIONS: FAST TRACK                                                                                   
SB 76-SUPPLEMENTAL APPROPRIATIONS                                                                                               
                                                                                                                                
The Committee heard testimony  from the Department of Public Safety,                                                            
the Department  of  Revenue, the  Department  of Transportation  and                                                            
Public  Facilities,  and the  Department  of Military  and  Veterans                                                            
Affairs. The bills were held in Committee.                                                                                      
                                                                                                                                
SB 78-MEDICAID FOR BREAST & CERVICAL CANCER                                                                                     
                                                                                                                                
The Committee  heard testimony from  the sponsor and the  Department                                                            
of Health and Social Services. The bill reported from Committee.                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 75                                                                                                         
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; and providing for an effective date."                                                                      
                                                                                                                                
     SENATE BILL NO. 76                                                                                                         
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; making appropriations to capitalize funds; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was the  fourth hearing for these  bills in the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Department of Public Safety                                                                                                   
                                                                                                                                
     SB 75                                                                                                                      
     Section 5                                                                                                                  
     Department of Public Safety                                                                                                
     Fish and Wildlife Protection                                                                                               
     Increased costs for vehicle, heating oil, electricity,                                                                     
     airplane, and helicopter fuel                                                                                              
     $229.3 general funds                                                                                                       
                                                                                                                                
KAREN  MORGAN,  Director,   Division  of  Administrative   Services,                                                            
Department of Public Safety,  stated that this request would provide                                                            
for increased  fuel costs. She informed  that the Department's  fuel                                                            
budget is  based on FY  2000 fuel prices;  however, she noted,  fuel                                                            
costs have  been increasing  on a  regular basis.  She reminded  the                                                            
Committee that  the Department submitted supplemental  fuel requests                                                            
in FY 01 and  FY 02. She asserted  that the Department attempted  to                                                            
mitigate  the level of this  request by utilizing  funds from  other                                                            
areas within  the Department, and  she stated that the Department's                                                             
ability to perform its  duties would be adversely affected were this                                                            
request denied.                                                                                                                 
                                                                                                                                
Co-Chair  Green asked whether  the hiring  of additional  personnel,                                                            
particularly  seasonal support personnel  in the Division  of Fish &                                                            
Wildlife Protection, is a factor in the increased costs.                                                                        
                                                                                                                                
Ms. Morgan  expressed  that this  request exclusively  provides  for                                                            
fuel expenses.  She  stated that  further mitigation  efforts  would                                                            
require  a  reduction in  the  level  of patrols  conducted  by  the                                                            
Department,  and  she  furthered,   denial  of  this  request  would                                                            
prohibit the historical,  budgeted hiring of seasonal  employees, as                                                            
those funds would be utilized to mitigate the fuel costs.                                                                       
                                                                                                                                
Senator Olson asked whether  this request includes the fuel expenses                                                            
for contractual services provided by non-State employees.                                                                       
                                                                                                                                
Ms. Morgan  replied that  the majority of  the expense is for  State                                                            
owned  vehicles; however,  she continued,  the State  is liable  for                                                            
some contractual  service  fuel expenses if  that were specified  in                                                            
the contract agreement.                                                                                                         
                                                                                                                                
Senator Olson  asked whether private  contractors pay for  their own                                                            
fuel.                                                                                                                           
                                                                                                                                
Ms. Morgan replied that  the State is responsible for fuel expenses,                                                            
in addition to the contractual service.                                                                                         
                                                                                                                                
Senator Hoffman  inquired about the  Department's total annual  fuel                                                            
consumption, in gallons.                                                                                                        
                                                                                                                                
Ms. Morgan replied  that the Department tracks fuel  consumption "by                                                            
type: 96,000 gallons for  vehicles; 24,000 gallons for heating fuel;                                                            
6,800 gallons for marine  fuel; and 6,078 and 2,847 gallons for Fish                                                            
& Wildlife  Protection  and Alaska  State Troopers  specific  patrol                                                            
missions."                                                                                                                      
                                                                                                                                
Senator Hoffman  asked whether the  Department solicits fixed  price                                                            
bids for fuel  on an annual basis,  as, he contended, fuel  requests                                                            
are consistently  included  in the Supplemental  requests.  He asked                                                            
what efforts the Department is undertaking to reduce fuel costs.                                                                
                                                                                                                                
Ms. Morgan  responded that  the Department  solicits bids for  fuel;                                                            
however, she  noted, some regions  of the State have limited  vendor                                                            
options. Additionally,  she noted, the Department  works with Juneau                                                            
Services   to  develop  appropriate   bid   documents  as   well  as                                                            
coordinating  with the Marine  Highway System  regarding their  fuel                                                            
bidding process.                                                                                                                
                                                                                                                                
Senator Hoffman  countered that nonetheless, the Department  exceeds                                                            
the budgeted fuel allotment by approximately $230,000.                                                                          
                                                                                                                                
Ms. Morgan explained that  fuel prices have increased between 40 and                                                            
80 percent in some areas.                                                                                                       
                                                                                                                                
Senator Hoffman  questioned  how fuel prices  could increase  when a                                                            
contract is in effect.                                                                                                          
                                                                                                                                
Senator  Olson agreed  that it is  difficult to  understand how  the                                                            
fuel  consumption  increase  warrants  this  level  of supplemental                                                             
request.                                                                                                                        
                                                                                                                                
Ms. Morgan replied that further information would be supplied.                                                                  
                                                                                                                                
Senator Olson  expressed concern regarding the price  being paid per                                                            
gallon to incur a $230,000 supplemental request.                                                                                
                                                                                                                                
Ms. Morgan  specified  that the Department's  FY  03 fuel budget  is                                                            
$334,247 and that actual expenses are estimated to be $522,782.                                                                 
                                                                                                                                
Co-chair Green  clarified that this is the amount  projected for the                                                            
entire fiscal year.                                                                                                             
                                                                                                                                
Ms. Morgan concurred.                                                                                                           
                                                                                                                                
Senator  Hoffman  asked  for  further  clarification  regarding  the                                                            
gallon usage breakdown.                                                                                                         
                                                                                                                                
Co-Chair Green summarized  that the Department projects the need for                                                            
an  additional  130,000  plus  gallons  at an  anticipated  cost  of                                                            
approximately  $300,000.  She  continued  that  the  total  cost  is                                                            
expected to be approximately $500,000.                                                                                          
                                                                                                                                
Co-chair  Green  asked  the  Department  to  supply  usage  breakout                                                            
information to the Committee.                                                                                                   
                                                                                                                                
     SB 76                                                                                                                      
     Section 6                                                                                                                  
     Department of Public Safety                                                                                                
     Fish and Game Fund                                                                                                         
     Revise  language appropriating  criminal  fines, penalties  and                                                            
     forfeitures into the  Fish and Game Fund based upon an analysis                                                            
     conducted  by the  Department of  Public Safety  and the  Court                                                            
     System.                                                                                                                    
                                                                                                                                
Ms. Morgan explained  that the Division of Fish &  Wildlife has been                                                            
partially  funded, since 1977,  by general  fund money transfers  to                                                            
the Fish  and Game fund.  She stated that  the level of the  general                                                            
fund  transferred   is  determined   by  a   calculation  based   on                                                            
adjudications  generated  from  Fish and  Game offender  fines.  She                                                            
stated that  the Department of Fish  and Game transmits a  letter to                                                            
the Court System  to verify the amount collected and  expected to be                                                            
deposited into the general  fund. She explained that, this year, the                                                            
Court  notified the  Department  that  the actual  collected  amount                                                            
could not be verified  because the Court's accounting  system "could                                                            
not track  collections on  a per violation  basis." She stated  that                                                            
this request  would alter  language to specify  that the  Department                                                            
refer  to "the amount  adjudged"  rather than  the amount  collected                                                            
when transmitting the letter.                                                                                                   
                                                                                                                                
Co-Chair  Green voiced the  understanding that  "there is no  way to                                                            
verify  that" what  is  charged for  a Fish  and Game  violation  is                                                            
collected at  100 percent. She continued  that the amount  requested                                                            
to be transferred  from the  general fund  to the Department  is the                                                            
"maximum money"  even though that  amount might not have  been fully                                                            
collected;  therefore, she stated,  this language change  is not the                                                            
solution to the issue.                                                                                                          
                                                                                                                                
Ms. Morgan agreed  with Co-chair Green's comments.  She informed the                                                            
Committee that the Court  System would be upgrading their accounting                                                            
system  within  the next  few  years, and  that  the accountability                                                             
process would be corrected.                                                                                                     
                                                                                                                                
     SB 76                                                                                                                      
     Section 16(9)                                                                                                              
     Department of Public Safety                                                                                                
     Miscellaneous Claims and Stale-dated Warrants $47.50                                                                       
                                                                                                                                
Ms. Morgan  stated that  this miscellaneous  request concerns  phone                                                            
calls and  fax simile charges  from a village  that were not  billed                                                            
until two years after the occurrence.                                                                                           
                                                                                                                                
Senator  Hoffman exclaimed  that the  paperwork  pertaining to  this                                                            
request incurred more expense than the actual charge.                                                                           
                                                                                                                                
Ms. Morgan agreed;  however, she stated that the State  is obligated                                                            
by statute to be responsible for the charge.                                                                                    
                                                                                                                                
Co-Chair  Green agreed  that the  transaction must  be addressed  in                                                            
this manner.                                                                                                                    
                                                                                                                                
     SB 76                                                                                                                      
     Section 17                                                                                                                 
     Department of Public Safety                                                                                                
     Ratification                                                                                                               
     Section 17(a)(5)                                                                                                           
     AR 47829-03(RS DOT/AST DET .08)                                                                                            
     $2,625.0                                                                                                                   
                                                                                                                                
Ms. Morgan  informed the Committee  that this ratification  provides                                                            
funds  for an  advertising  campaign  resulting from  a legislation                                                             
lowering the Blood Alcohol Content limit to 0.08 percent.                                                                       
                                                                                                                                
Department of Revenue                                                                                                         
                                                                                                                                
     SB 75                                                                                                                      
     Section 6                                                                                                                  
     Department of Revenue                                                                                                      
     Muni Bond Bank                                                                                                             
     Additional bond issuance costs                                                                                             
     $142.0 Muni Bond Bank Rcpts                                                                                                
                                                                                                                                
LARRY  PERSILY,   Deputy   Commissioner,   Department  of   Revenue,                                                            
explained that this request  would provide for current and projected                                                            
FY 03 Bond Bank  operating expenses. He informed the  Committee that                                                            
"FY 03 is anticipated  to be a record year for Bond  Band activity,"                                                            
resulting from  the volume of municipalities  arranging for  revenue                                                            
bonds  and general  obligation bonds.  He stated  that this  request                                                            
would fund  such things as legal financial  advisors' fees,  trustee                                                            
services, and  rating agencies' fees. He stated that,  historically,                                                            
the Bond  Bank budget "is  based on estimates  of how much  activity                                                            
the Bond Bank  would have the next fiscal year." He  stated that the                                                            
FY 03  budget is  $522,700, and  he reminded the  Committee  that in                                                            
previous  years, if the activity  of the Bond  Bank were lower  than                                                            
budgeted, the money would  not be spent. However, he continued, were                                                            
a higher volume  of activity to occur,  the Department historically                                                             
presents a supplemental request.                                                                                                
                                                                                                                                
Senator  Hoffman  asked whether  a  portion  of the  increased  bond                                                            
activity  results  from loan  refinancing  due to  lowered  interest                                                            
rates.                                                                                                                          
                                                                                                                                
Mr. Persily  responded that  some of the bond  issuances are  due to                                                            
refinancing "to  save money." He explained that while  the Bond Bank                                                            
strives  to  lock  in  the  best  available   interest  rate  for  a                                                            
municipality  from  the  onset, the  Bond  Bank  would work  with  a                                                            
municipality to refinance were lower interest rates to occur.                                                                   
                                                                                                                                
Senator B.  Stevens asked why the  borrower, rather than  the State,                                                            
is not responsible for loan fees.                                                                                               
                                                                                                                                
Mr. Persily  replied that  the Bond Bank  being responsible  for the                                                            
financial fees is an established  procedure. However, he voiced, the                                                            
procedure of paying  these fees from the Bond Bank  Earnings Reserve                                                            
Account could  be revisited.  He reiterated  that earnings  from the                                                            
loan fund, rather than general funds, are used to pay the fees.                                                                 
                                                                                                                                
Senator  B.  Stevens  commented  that,   in private   industry,  the                                                            
borrower, rather  than the lender,  pays the fees associated  with a                                                            
loan. He furthered that  in this case, some of the costs of issuance                                                            
are paid for by the State.                                                                                                      
                                                                                                                                
Mr. Persily  agreed; however, he reiterated  that the fees  are paid                                                            
from the Bond Bank's earnings  reserve account at no additional cost                                                            
to the State.                                                                                                                   
                                                                                                                                
Senator  B.  Stevens   expressed  that  a  $142,000  increase   over                                                            
the$522,000 FY 03 budget  is a significant increase in fee expenses.                                                            
                                                                                                                                
Co-Chair  Green  calculated   this  to  be  a  twenty  five  percent                                                            
increase.                                                                                                                       
                                                                                                                                
Mr. Persily  asserted  that the  Bond Bank  activity  this year  has                                                            
"significantly increased."                                                                                                      
                                                                                                                                
Co-chair  Green asked  whether the  concern regarding  which  entity                                                            
would be responsible  for loan fees  has previously been  addressed.                                                            
                                                                                                                                
Senator Taylor  interjected that this  issue has been discussed.  He                                                            
shared  the  concern  that small  communities  might  not  have  the                                                            
ability to absorb fee expenses.                                                                                                 
                                                                                                                                
Mr. Persily  pointed out that the  Bond Bank Authority, in  addition                                                            
to  using  its  reserve  fund  earnings  to  pay  for  the  cost  of                                                            
operations,  also  remits   a dividend   to  the  State  from  those                                                            
earnings. He concluded  that the State "does receive some funds from                                                            
the Bond Bank."                                                                                                                 
                                                                                                                                
     SB 76                                                                                                                      
     Section 13                                                                                                                 
     Department of Revenue                                                                                                      
     Alcohol Beverage Control Board                                                                                             
     Contractual expenses for hearing officers for increased number                                                             
     of formal hearings in contested liquor license complaints and                                                              
     suspensions, and staff travel and per diem for hearings.                                                                   
     $26.0 general funds                                                                                                        
                                                                                                                                
Mr. Persily stated that  this request is the result of more hearings                                                            
than projected  occurring  in FY 03.  He mentioned  that six  liquor                                                            
licenses are currently  being contested, and he noted,  each hearing                                                            
costs approximately $6,000 to conduct.                                                                                          
                                                                                                                                
Co-Chair  Green  asked  whether  funding  this  expense  by  receipt                                                            
supported services is an option.                                                                                                
                                                                                                                                
Mr.  Persily stated  that  discussion  is  occurring to  change  the                                                            
funding mechanism, as,  he continued, the Alcoholic Beverage Control                                                            
(ABC) Board  receives  more in licensing  fees than  it expends  for                                                            
operating costs each year.                                                                                                      
                                                                                                                                
AT EASE 9:31 AM / 9:32 AM                                                                                                       
                                                                                                                                
Department of Transportation and Public Facilities                                                                            
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(a)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Title change: Nondalton: Airport Resurfacing to Nondalton:                                                                 
     Airport Improvements and Airport Layout Plan                                                                               
                                                                                                                                
NANCY  SLAGLE,  Director,   Division  of  Administrative   Services,                                                            
Department of  Transportation and Public Facilities,  explained that                                                            
this  request  would authorization   a title  change  involving  the                                                            
Nondalton  Airport.  She  informed  that  during  the FY  03  budget                                                            
process, an amendment from  the Office of the Governor combined this                                                            
project with a  project for an airport layout plan.  She stated that                                                            
as a  result,  both projects  were  consolidated  under one  Federal                                                            
Aviation Administration  (FAA) grant. She continued that during this                                                            
consolidation   process,   the   corresponding   name   change   was                                                            
overlooked.  She stated that the title  change is required  in order                                                            
for the project to continue.                                                                                                    
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(b)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Title change: Anchorage: Muldoon Road Landscaping and                                                                      
                                                       th                                                                       
     Pedestrian Improvements - Glenn Highway to 36 Avenue to                                                                    
     "…Improvements - Regal Mountain to Bartlett Drive"                                                                         
                                                                                                                                
Ms.  Slagle stated  that  this request  is also  the  result of  the                                                            
Office  of  the  Governor's  amendment  process  that  expanded  the                                                            
Anchorage   Metropolitan    Area   Transportation    Study   (AMATS)                                                            
improvement  projects.  She  reiterated  that  the title  change  is                                                            
required before the project could continue.                                                                                     
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(c)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Title change: Juneau West Douglas Highway Extension to Juneau:                                                             
     Gastineau Channel Second Crossing                                                                                          
                                                                                                                                
Ms. Slagle informed the  Committee that this project was "earmarked"                                                            
and subsequently  amended by  the US Congress  because the  City and                                                            
Borough of Juneau  levied a higher priority status  to the Gastineau                                                            
Channel second crossing  than to the West Douglas highway extension.                                                            
She  stated  that  the  title  of  the  project  was  inadvertently                                                             
overlooked and a name change is required.                                                                                       
                                                                                                                                
Senator Taylor  asked whether the State granted an  appropriation to                                                            
this project.                                                                                                                   
                                                                                                                                
Ms. Slagle  verified that  a State appropriation  was granted  in FY                                                            
00.                                                                                                                             
                                                                                                                                
Senator   Taylor    asked   how   many   projects   have    received                                                            
appropriations,  but have had  no action due  to such things  as the                                                            
need for a name change.                                                                                                         
                                                                                                                                
Ms. Slagle  acknowledged  that the Department  is investigating  the                                                            
status  of  appropriations  that have  been  "on  the books  for  an                                                            
extended length  of time," but have  had no action. She voiced  that                                                            
she did not know the total dollar amount "of old projects."                                                                     
                                                                                                                                
Senator Taylor asserted that, "it is a very significant number."                                                                
                                                                                                                                
Ms. Slagle  agreed,  and clarified  that numerous  airport  projects                                                            
would be  included in  this exercise because,  while appropriations                                                             
have  been made,  the Department  receives  direction  from the  FAA                                                            
concerning  which  projects would  be  undertaken.  She stated  that                                                            
these projects are "constantly being reviewed."                                                                                 
                                                                                                                                
Senator Taylor  asked whether the  amount of projects on  hold could                                                            
amount to as much as $400 million.                                                                                              
                                                                                                                                
Ms. Slagle voiced uncertainty as to the total amount.                                                                           
                                                                                                                                
Senator  Taylor asked whether  the appropriation  for the  Gastineau                                                            
Channel crossing is sufficient to complete the project.                                                                         
                                                                                                                                
Ms. Slagle responded  that the appropriation allows  for preliminary                                                            
engineering  work, reconnaissance,  and environmental scoping  to be                                                            
conducted.  She noted that  construction costs  are not included  in                                                            
the appropriation.  She  stated  that further  State appropriations                                                             
would   be   requested   were  additional   Congressional    support                                                            
forthcoming.                                                                                                                    
                                                                                                                                
Senator Taylor  asked the  testifier the status  of the funding  for                                                            
the 3.5-mile  Juneau  highway extension  to Cascade  Point that  was                                                            
appropriated approximately three years ago.                                                                                     
                                                                                                                                
Ms.  Slagle  answered that  the  status  of that  project  would  be                                                            
forthcoming.                                                                                                                    
                                                                                                                                
Senator Taylor  requested that information be provided.  He asserted                                                            
that extending  the highway  to Cascade Point  would reduce  a ferry                                                            
transport  from Juneau  northbound by  37 miles.  He declared  that,                                                            
rather than  allotting funding for  additional Juneau projects;  the                                                            
Legislature  should  encourage the  City and  Borough  of Juneau  to                                                            
begin projects that have already been funded.                                                                                   
                                                                                                                                
Co-Chair  Wilken asked the  reason this request  is included  in the                                                            
supplemental budget fast track.                                                                                                 
                                                                                                                                
Ms. Slagle  responded that approval  of this item would allow  for a                                                            
request for  project bids to be let  in April; which, she  furthered                                                            
would allow for "a full construction season."                                                                                   
                                                                                                                                
Co-Chair  Wilken asked  whether there  were any  other expenditures                                                             
dependent upon  approval of the title change supplemental  requests.                                                            
                                                                                                                                
Ms.  Slagle  explained  that  the  Department   currently  has  some                                                            
expenditure  authority   for portions   of  the combined   projects;                                                            
however,  she  clarified,  authority must  be  granted  in order  to                                                            
conduct  the  portions  that  were  added  to  the  original  titled                                                            
project.                                                                                                                        
                                                                                                                                
Co-Chair Wilken  asked the Department to provide the  Committee with                                                            
a breakout detailing  which of the five projects are  arrested until                                                            
approval of the title change is granted.                                                                                        
                                                                                                                                
Senator   Hoffman  asked   the  criteria   whereby  the   Department                                                            
determines whether an item  is identified as a reappropriation or as                                                            
a supplemental request.                                                                                                         
                                                                                                                                
Ms. Slagle defined  reappropriation as using funds  appropriated to,                                                            
or  available  from, a  specific  project  for a  separate  project.                                                            
However, she expressed,  some projects such as the  West Juneau Road                                                            
extension item  afore detailed as  a title change, could,  according                                                            
to  the  reappropriation  definition,  be  considered  either  as  a                                                            
reappropriation or as a supplemental title change request.                                                                      
                                                                                                                                
Co-Chair Green stated that  the issue of how a project is identified                                                            
is worthy of discussion.                                                                                                        
                                                                                                                                
     SB 76                                                                                                                      
     Section 7(d)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Nunapitchuk Resurfacing and Lighting to Nunapitchuk Airport                                                                
     Relocation (SLA 2001)                                                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Section 7(e)                                                                                                               
     Nunapitchuk Resurfacing and Lighting to Nunapitchuk Airport                                                                
     Relocation (FSSLA 1999)                                                                                                    
                                                                                                                                
Ms.  Slagle  explained  that these  requests  are  the result  of  a                                                            
revision  to  the scope  of  the project.  She  explained  that  the                                                            
original  project addressed  resurfacing  the runway;  however,  she                                                            
continued,  as the  project proceeded,  it was  determined that  the                                                            
runway needed  "to be shifted" from  its original site to  allow for                                                            
better site drainage; a  safety zone around the extended runway; and                                                            
the  accommodation  of power  lines  and  new runway  lighting.  She                                                            
stated that this  request also provides for a new  building to house                                                            
airport snow removal equipment.                                                                                                 
                                                                                                                                
Co-Chair  Green   asked  whether   the  original  runway   would  be                                                            
abandoned.                                                                                                                      
                                                                                                                                
Ms. Slagle  clarified that the runway  is not being moved  enough to                                                            
warrant abandoning  the original runway. She continued  that the new                                                            
airstrip  would  allow  for  larger  aircraft  and  a  safer  runway                                                            
setting.                                                                                                                        
                                                                                                                                
Senator  Olson affirmed  that the  Nunapitchuk  Airport, like  other                                                            
airports in the region,  has drainage problems. He asked for further                                                            
explanation regarding the scope of the project.                                                                                 
                                                                                                                                
Ms. Slagle  stated that the location  of the new runway would  be in                                                            
close  proximity  to  the original  runway  and  would  include  new                                                            
lighting.                                                                                                                       
                                                                                                                                
Senator Olson  asked whether  the original  runway would be  without                                                            
lights during the construction phase.                                                                                           
                                                                                                                                
Ms. Slagle  responded that  the reason this  request is included  in                                                            
the supplemental  bill to allow the new runway to  be completed this                                                            
construction season.                                                                                                            
                                                                                                                                
Senator  Olson  clarified  that  his concern  arises  from  new  FAA                                                            
regulations requiring runways to be lit.                                                                                        
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(f)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Highways and Aviation, and Facilities                                                                                      
     Restore highways and maintenance cuts as directed by Governor                                                              
     Murkowski on Dec. 12                                                                                                       
     $2,562.0 general funds                                                                                                     
                                                                                                                                
Ms. Slagle expressed that  the FY 03 road maintenance and operations                                                            
budget was  not adequately funded,  and that as a result,  employees                                                            
were laid off  and maintenance stations  were closed. She  continued                                                            
that in December  2002, the newly elected Governor  Frank Murkowski,                                                            
ordered  maintenance   stations  re-opened   and  approximately   69                                                            
employees hired  or rehired to provide  the necessary level  of road                                                            
and airport maintenance.                                                                                                        
                                                                                                                                
                                                                                                                                
SFC 03 # 12, Side B 09:51 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair  Green asked  whether  the mild  winter  has provided  cost                                                            
saving opportunities.                                                                                                           
                                                                                                                                
Ms. Slagle responded that  the majority of the funds being requested                                                            
provide for fixed  costs such as equipment expenses,  utilities, and                                                            
employee  benefits.  She  professed  that,  while  some  areas  have                                                            
received  lower  than  normal  levels  of  snow,  other  areas  have                                                            
experienced higher than  usual levels. She continued that the warmer                                                            
temperatures  have resulted in icing  situations that have  required                                                            
both chemical  and sand treatments.  She stated that the  Department                                                            
continues to  monitor the situation  to determine any cost  savings,                                                            
particularly overtime expenses.                                                                                                 
                                                                                                                                
Co-Chair   Wilken  expressed   surprise  that   the  lack   of  snow                                                            
experienced  in the State had not  generated more savings.  He asked                                                            
that information  be provided detailing the percent  of the expenses                                                            
attributed to fixed costs.                                                                                                      
                                                                                                                                
Ms.  Slagle  expressed  that  the  Department,  when  verifying  the                                                            
amount,  was "assured"  that  full time  employees  were working  on                                                            
deferred maintenance  needs when not  dealing with snow conditions.                                                             
She would supply the fixed cost information to the Committee.                                                                   
                                                                                                                                
Co-Chair Wilken specified  that maintenance expenses associated with                                                            
the Fairbanks  North Star Borough area, which has  experienced three                                                            
snow  falls greater  than four  inches,  would provide  a good  cost                                                            
analysis.  He inquired as  to whether the  Department's unallocated                                                             
reductions were isolated to the maintenance budget.                                                                             
                                                                                                                                
Ms. Slagle stated that  the FY 03 management plan reflected that the                                                            
unallocated reduction was distributed throughout the Department.                                                                
                                                                                                                                
Co-Chair  Green  commented,  however,  that  highways  and  aviation                                                            
maintenance  and facilities experienced  the bulk of the  reduction.                                                            
                                                                                                                                
Ms. Slagle  responded that the highway  maintenance budget  accounts                                                            
for  approximately  85  percent of  the  Department's  general  fund                                                            
budget and therefore would experience the largest "hit."                                                                        
                                                                                                                                
Senator Hoffman  voiced his appreciation  to Governor Murkowski  for                                                            
supporting the restoration of maintenance funding.                                                                              
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(g)(h)(i)                                                                                                         
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Central Region Planning new capital project.                                                                               
     Dillingham-Aleknagik    Road    Milepost   8-23   Resurfacing.                                                             
     Accelerated  in the STIP  to coincide  with the airport  runway                                                            
     repaving project scheduled for summer of 2003.                                                                             
     $8,200.0 federal funds                                                                                                     
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(h)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Glenn Highway Intersection  Improvements & Resurfacing, Gambell                                                            
     to  McCarrey.   Accelerated  in  STIP  to  address   increasing                                                            
     deteriation of the roadway surface.                                                                                        
     $6,000.0 federal funds                                                                                                     
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(i)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Central Region Planning new capital project.                                                                               
     Old Glenn Highway  Reconstruction, N Eagle River Exit to Peters                                                            
     Creek. Accelerated  in the AMATS TIP to accommodate substantial                                                            
     increase   in   traffic   projections   due  to   recent   area                                                            
     developments.                                                                                                              
     $5,625.0 federal funds                                                                                                     
                                                                                                                                
Co-chair  Green asked  the process  whereby a  project's ranking  is                                                            
advanced  in  the  Statewide   Transportation  Improvement   Program                                                            
(STIP).                                                                                                                         
                                                                                                                                
Ms. Slagle responded  that these three projects are  being requested                                                            
to allow sufficient time  for bid advertising in order to permit the                                                            
projects to have  a full construction season. She  stated that these                                                            
projects  include  such things  as  allowing a  road  project to  be                                                            
combined   with  a  separate   airport  project   to  provide   "for                                                            
efficiencies  in the  process." She  stated that  approval of  these                                                            
projects would  not negatively affect  other projects identified  in                                                            
the STIP.                                                                                                                       
                                                                                                                                
     SB 75                                                                                                                      
     Section 7(j)                                                                                                               
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Barrow runway apron paving and safety area expansion project.                                                              
     $4,900.0 federal funds                                                                                                     
                                                                                                                                
Ms.  Slagle  stated   that  this  request  is  being   presented  to                                                            
accommodate the approximately  one-month construction season at this                                                            
location.                                                                                                                       
                                                                                                                                
AT EASE 10:00 AM / 10:01 AM                                                                                                     
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(a)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Central Region Highways and Aviation                                                                                       
     Carry forward excess Whittier Tunnel toll revenue above FY2002                                                             
     appropriation to comply with federal code requiring all toll                                                               
     revenue to be spent on the toll facility.                                                                                  
     $819.1 Receipt Supported Services                                                                                          
                                                                                                                                
Ms. Slagle informed the  Committee that this request would authorize                                                            
the  Department to  access  the revenue  generated  by the  Whittier                                                            
Tunnel toll.  She explained  that federal  regulations specify  that                                                            
any revenue  generated by a toll facility  constructed with  federal                                                            
dollars is  required to support operation  and maintenance  needs of                                                            
that facility.                                                                                                                  
                                                                                                                                
Senator Taylor asked what other funds support the facility.                                                                     
                                                                                                                                
Ms. Slagle  specified that  a combination  of federal highway  funds                                                            
and toll revenue provide maintenance and operation funds.                                                                       
                                                                                                                                
Co-Chair  Green asked  whether  the  Whittier Tunnel  toll  receipts                                                            
could be used for other federal projects maintenance needs.                                                                     
                                                                                                                                
Ms. Slagle  responded that  any revenue, in  excess of the  tunnel's                                                            
maintenance  and  operation  needs,  could  be used  to  fund  other                                                            
federal Title 23 eligible projects.                                                                                             
                                                                                                                                
Ms. Slagle reminded the  Committee that due to the Whittier Tunnel's                                                            
toll fees  being lowered  the previous  year, these  funds would  be                                                            
required to offset the resulting budget shortfall.                                                                              
                                                                                                                                
Co-Chair  Green   clarified  therefore   that  these  funds   are  a                                                            
"temporary fix."                                                                                                                
                                                                                                                                
Ms. Slagle agreed.                                                                                                              
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(b)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Fairbanks International Airport                                                                                            
     Federal Homeland authority fund source switch from federal                                                                 
     funds to International Airport Revenue Fund for mandated                                                                   
     security activities at Fairbanks airport.                                                                                  
     ($326.0) federal funds                                                                                                     
      $326.0 International Airport Revenue Fund                                                                                 
                                                                                                                                
Ms. Slagle voiced that  this funding change request results from the                                                            
implementation  of  homeland  security measures  at  the  Fairbanks'                                                            
airport. She continued  that the expected federal  dollars to assist                                                            
in the implementation of the measures were never received.                                                                      
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(c)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Regional Admin Services                                                                                                    
     Increased costs per negotiated contract with the Confidential                                                              
     Employees Association, retroactive to September 2001 and full                                                              
     FY 2003 costs.                                                                                                             
     $72.6 total funds                                                                                                          
          $25.7 general funds                                                                                                   
          $46.9 various funds                                                                                                   
                                                                                                                                
Ms. Slagle explained  that this request would provide  for increased                                                            
wage expenses for 14 employees  who were reclassified as a result of                                                            
a recently  completed re-classification  study.  She continued  that                                                            
the contract with the Employees  Association provided that these re-                                                            
classification  expenses would be retroactive to September  of 2001.                                                            
                                                                                                                                
Co-Chair Green  asked the reason this request is being  submitted in                                                            
the supplemental budget rather than as a ratification.                                                                          
                                                                                                                                
MS. Slagle  responded that these expenses  were "not encumbered"  in                                                            
FY  02,  and  therefore,   she  continued,  are  not   eligible  for                                                            
ratification consideration.                                                                                                     
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(d)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Marine Highway System                                                                                                      
     Marine  Highway System increased  fuel costs. July 2  fuel cost                                                            
     projected  at 81.4 cents per gal with 8.7mm gallon  use; Jan 27                                                            
     revised  projection  at  90.7  cents  with  9.6mm  gallon  use.                                                            
     Increased  use  was  due to  cancellation  of  private  service                                                            
     contract to Metlakatla.                                                                                                    
     $450.0 Marine Highway System Fund                                                                                          
                                                                                                                                
Ms. Slagle  stated  that this request  results  from increased  fuel                                                            
costs as well  as an increase in the amount of fuel  utilized by the                                                            
Alaska  Marine  Highway  System.  She  detailed  the  increases  and                                                            
specified  that,  while the  Department  experienced  a 1.6  million                                                            
increase in  fuel expenses, it was  able to absorb all but  $450,000                                                            
of the increase.                                                                                                                
                                                                                                                                
Co-Chair  Green   asked  for  further   information  regarding   the                                                            
circumstances  resulting  from  a route  cancellation  by a  private                                                            
contractor, the Silver Eagle.                                                                                                   
                                                                                                                                
Ms. Slagle  noted that the community  of Metlakatla did not  approve                                                            
of the type of vessel being  used by the private contractor, and the                                                            
Department decided to replace  the contracted service with the State                                                            
ferry, the M/V Aurora.  She stated that adding service to Metlakatla                                                            
incurred additional fuel expenses.                                                                                              
                                                                                                                                
Co-Chair  Green  asked  whether the  Alaska  Marine  Highway  System                                                            
experienced increased fuel costs throughout the system.                                                                         
                                                                                                                                
Ms. Slagle responded that  the increased fuel costs were experienced                                                            
throughout the system.                                                                                                          
                                                                                                                                
CAPTAIN  GEORGE  CAPACCI, General  Manager,  Alaska  Marine  Highway                                                            
System (AMHS)  explained that in developing  the FY 03 AMHS  budget,                                                            
the AMHS investigated  the use of alternate methods  to reduce costs                                                            
to  the  System, and,  he  continued,  contracting  for  service  to                                                            
Metlakatla  was considered  a temporary  solution  until the  vessel                                                            
being built  by the State to service  the community is completed  in                                                            
the spring of 2004.                                                                                                             
                                                                                                                                
Senator Olson  asked the difference in the cost of  using the Silver                                                            
Eagle rather than the M/V Aurora.                                                                                               
                                                                                                                                
Captain Capacci responded  that this number would be provided to the                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Olson asked which vessel is owned by the State.                                                                         
                                                                                                                                
Captain  Capacci  clarified that  the  M/V Aurora  is  owned by  the                                                            
State.                                                                                                                          
                                                                                                                                
Senator Olson  asked how the decision to use the M/V  Aurora for the                                                            
service to Metlakatla transpired.                                                                                               
                                                                                                                                
Captain Capacci responded that the Department made the decision.                                                                
                                                                                                                                
Senator  Hoffman commented  that, by his  calculations, the  funding                                                            
request  for fuel  should  be higher  than the  supplemental  amount                                                            
requested.                                                                                                                      
                                                                                                                                
Captain  Capacci  pointed  out that  the  AMHS  was able  to  absorb                                                            
approximately  $1.2  million   of  the $1.6   million  fuel  overage                                                            
expense.                                                                                                                        
                                                                                                                                
Senator  Hoffman  questioned  how  the  AMHS budget  "could  be  ten                                                            
percent off"  from its estimated fuel  consumption since  its routes                                                            
are consistent. He asked whether service was expanded.                                                                          
                                                                                                                                
Captain  Capacci   concurred  that   while  the  AHMS  schedule   is                                                            
established,  such  things as  weather and  currents  do affect  the                                                            
cost. He stated  that the unexpected service to Metlakatla  impacted                                                            
the budget.                                                                                                                     
                                                                                                                                
Senator Hoffman opined  that, by utilizing such things as historical                                                            
costs, the AHMS could more accurately project fuel consumption.                                                                 
                                                                                                                                
Co-Chair  Green requested  that  further information  regarding  the                                                            
service to Metlakatla be provided to the Committee.                                                                             
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(e)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Title change: Scammon Bay: Snow Removal Equipment Building                                                                 
     should include "and Airport Layout Plan"                                                                                   
                                                                                                                                
Ms. Slagle  stated that this title  change request is the  result of                                                            
the original project being amended.                                                                                             
                                                                                                                                
Senator Olson  voiced concern  that the name  change indicates  that                                                            
funding would  now be earmarked for the airport rather  than for the                                                            
snow removal equipment building.                                                                                                
                                                                                                                                
Ms.  Slagle  clarified   that  the  name  change  would   allow  the                                                            
Department to fund both projects.                                                                                               
                                                                                                                                
Senator Olson  asked for assurance  that the snow removal  equipment                                                            
building would be built.                                                                                                        
                                                                                                                                
Ms. Slagle responded that the building would be built.                                                                          
                                                                                                                                
     SB 76                                                                                                                      
     Section 14(f)                                                                                                              
     Department of Transportation and Public Facilities                                                                         
     Capital                                                                                                                    
     Title change: Hatcher Pass: Milepost 34 to 39 - Rehabilitation                                                             
     should be Milepost 24 to 39 - Rehabilitation                                                                               
                                                                                                                                
Ms.  Slagle noted  that  this  title change  would  accommodate  the                                                            
expansion of the project to provide drainage and culvert repair.                                                                
                                                                                                                                
     SB 76                                                                                                                      
     Section 16(10)                                                                                                             
     Department of Transportation and Public Facilities                                                                         
     Miscellaneous Claims and Stale-dated Warrants $26.82                                                                       
                                                                                                                                
Ms. Slagle stated  that this request would fund an  outstanding debt                                                            
from the year 2000.                                                                                                             
                                                                                                                                
Department of Department of Military and Veterans Affairs                                                                     
                                                                                                                                
     SB 76                                                                                                                      
     Section 4                                                                                                                  
     Department of Military and Veterans Affairs                                                                                
     Disaster Relief Fund                                                                                                       
     Capitalize   the  fund  for   declared  disasters:   earthquake                                                            
     $5,086.4  GF and $14.848.1 Fed; interior flood  $1,268.0 GF and                                                            
     $4,541.3  Fed;  NW Arctic  Borough fall  sea  storm $851.0  GF;                                                            
     Kenai  Peninsula flooding  $3,571.0  GF and  $11,704.5 Fed  and                                                            
     $830.0 GF for core emergency services.                                                                                     
     $42,700.3 Total Funds                                                                                                      
          $11,606.4 general funds                                                                                               
          $31,093.9 federal funds                                                                                               
                                                                                                                                
JOHN  CRAMER,   Director,  Division   of  Administrative   Services,                                                            
Department  of Military  and Veterans  Affairs  explained that  this                                                            
request  would capitalize  the  Disaster Relief  Fund  for the  four                                                            
disasters the State experienced in FY 03.                                                                                       
                                                                                                                                
Co-Chair Green  asked whether the federal/state funding  formula has                                                            
been  revised as  she questioned  the  percentage  of State  general                                                            
funds being requested compared to the federal funds.                                                                            
                                                                                                                                
Mr. Cramer stated  that the number of disasters could  contribute to                                                            
this increase.                                                                                                                  
                                                                                                                                
DENISE  LICCILOI,  Administrative   Services  Manager,  Division  of                                                            
Administrative   Services,  Department  of  Military   and  Veterans                                                            
Affairs  informed the Committee  that the  state/federal  emergency-                                                            
funding ratio  is 25/75 percent respectively  for public  assistance                                                            
and HazMat  funding expenses.  However, she  clarified, the  Federal                                                            
Emergency  Management  Agency (FEMA)  recently  changed the  funding                                                            
process regarding individual  assistance. She continued that FEMA is                                                            
now paying its  portion of the expenses directly to  the individuals                                                            
rather than  routing those funds through  the State. Therefore,  she                                                            
expressed,  rather than  the numbers  reflecting  the entire  amount                                                            
paid by  the federal  government,  the numbers only  reflect  the 25                                                            
percent paid by the State.                                                                                                      
                                                                                                                                
Co-Chair Green summarized  that the federal government is continuing                                                            
to pay  75 percent  of the  expenses,  however, that  amount is  not                                                            
reflected in the presentation.                                                                                                  
                                                                                                                                
Co-chair  Green questioned  the $830,000  being  requested for  core                                                            
emergency services.                                                                                                             
                                                                                                                                
Mr. Cramer  clarified that  $680,000 of the  $830,000 identified  in                                                            
the request is the historical  base amount. He detailed that $30,000                                                            
of the  additional $150,000  being requested  would provide  for on-                                                            
going training  and preparedness exercises  for the State's  defense                                                            
force, and,  he asserted, the remaining  $120,000 would provide  the                                                            
necessary  funding  to  operate  the  State Emergency  Coordination                                                             
Commission (SECC).                                                                                                              
                                                                                                                                
Ms. Liccioli  informed  the Committee  that  prior to  the last  two                                                            
years,  response  to  emergencies  was  on  an  as-needed  basis  by                                                            
utilizing  existing  staff.  However,  she continued,  in  order  to                                                            
ensure quicker  emergency response,  the Department dedicated  staff                                                            
to handle  SECC calls.  She continued  that the  absorption of  this                                                            
responsibility  jeopardized  traditional duties  and diverted  funds                                                            
from other sources to fund  the SECC program. She specified that the                                                            
$120,000 being  requested would allow the Department  to reestablish                                                            
its  ability to  perform traditional  functions  and  hire staff  to                                                            
explicitly manage training and preparedness efforts.                                                                            
                                                                                                                                
Co-Chair  Green stated  that this  program should  be funded  in the                                                            
Department's   operating  budget.  She  questioned   whether  it  is                                                            
appropriate  to include  this  request  in the  supplemental  budget                                                            
bill.                                                                                                                           
                                                                                                                                
Senator Hoffman  voiced the understanding that the  SECC program has                                                            
been underfunded; and therefore,  he asked whether $120,000 would be                                                            
an annual expense.                                                                                                              
                                                                                                                                
Ms. Liccioli  concurred that the SECC  program has been underfunded                                                             
by $120,000.  She  stated  that the  Department has  maintained  the                                                            
program  by  the  hiring   non-permanent  staff  and   leaving  some                                                            
positions vacant.                                                                                                               
                                                                                                                                
Senator Hoffman,  noting the historical  funding level of  $688,000,                                                            
asked how many years the SECC has been under-funded.                                                                            
                                                                                                                                
Ms. Liccioli  clarified that  the under-funding  occurred two  years                                                            
ago when there  was a shift from staffing  the SECC on an  as-needed                                                            
basis  by using personnel  assigned  to other  duties to  full-time,                                                            
dedicated SECC staff.                                                                                                           
                                                                                                                                
Co-chair Green ordered the bills HELD in Committee.                                                                             
                                                                                                                                
AT EASE 10:27 AM / 10:29 AM                                                                                                     
                                                                                                                                
Co-chair Wilken chaired the remainder of the meeting.                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 78                                                                                                         
     "An Act relating  to an optional group of persons  eligible for                                                            
     medical  assistance   who  require  treatment  for  breast  and                                                            
     cervical  cancer; relating to cost sharing by  those recipients                                                            
     under  the medical  assistance  program; and  providing for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken stated  that this bill continues the optional breast                                                            
and  cervical cancer  Medicaid  coverage due  to  terminate in  June                                                            
2003. He  stated that this  bill would authorize  the Department  of                                                            
Health  and  Social  Services  to  impose  recipient   cost  sharing                                                            
procedures as allowed by federal regulations.                                                                                   
                                                                                                                                
Co-Chair Green, the bill's  sponsor, stated that the purpose of this                                                            
bill  is to  extend  the  termination  date for  this  program.  She                                                            
reminded  the  Committee  that  those  individuals  who  have  begun                                                            
treatment would continue  to receive Medicaid coverage as previously                                                            
mandated by separate Legislation.  Additionally, she noted, the bill                                                            
would allow the  Department of Health and Social Services  to impose                                                            
allowable  cost sharing between  the State  and program recipients.                                                             
She furthered  that the bill's language is consistent  with language                                                            
of the Denali  KidCare program. She noted that the  bill would allow                                                            
the  State the  flexibility  required  to  align with  any  upcoming                                                            
federal  "re-workings"  of  the program.  She  noted that  were  the                                                            
existing legislation  to include this  flexibility, the State  would                                                            
have been eligible for additional federal funding.                                                                              
                                                                                                                                
ELMER  LINDSTROM, Special  Assistant,  Office of  the Commissioner,                                                             
Department  of Health and  Social Services  voiced the Department's                                                             
support of  this legislation.  He specified  that the Office  of the                                                            
Governor  would   welcome  legislation  that  would   make  Medicaid                                                            
coverage of  breast and cervical cancer  treatment "permanent,"  and                                                            
he  noted that  the bill's  fiscal  note would  be  included in  the                                                            
Governor's amended FY 04  budget. He affirmed that the bill's fiscal                                                            
note is consistent  with the Department's  projections as  there has                                                            
been no unexpected growth in the program.                                                                                       
                                                                                                                                
Senator Olson,  a medical doctor,  thanked the sponsor on  behalf of                                                            
the  individuals  provided  coverage  by this  bill.  He  questioned                                                            
whether the  State is charging  patients  the maximum co-pay  amount                                                            
allowable under federal law.                                                                                                    
                                                                                                                                
Mr.  Lindstrom specified  that,  "the language  in  the proposal  is                                                            
consistent with current  practice relative to co-pays." He continued                                                            
that  the  issue  of  the  co-payment  amount  "is  something  worth                                                            
reiterating"  as  this program  provides  coverage  to people  whose                                                            
income is  "significantly"  above the typical  qualifying level.  He                                                            
stated  that  the  Murkowski  Administration  is  committed  to  the                                                            
broader   qualification  coverage.   Furthermore,   he  noted,   the                                                            
Administration supports  a co-payment "cost sharing" contribution by                                                            
the beneficiaries  of the program.  He noted that further  expansion                                                            
of qualifications into  the program would require changes in federal                                                            
regulations.                                                                                                                    
                                                                                                                                
Senator Olson  asked whether the State is charging  participants the                                                            
maximum co-payment amount.                                                                                                      
                                                                                                                                
Mr. Lindstrom  responded that the Department would  collect the same                                                            
level of  co-payments under  the proposed  legislation as  collected                                                            
under the current legislation.                                                                                                  
                                                                                                                                
Senator  Olson asked  whether  the State  collects  the maximum  co-                                                            
payment amount allowed under federal law.                                                                                       
                                                                                                                                
Mr. Lindstrom replied that is correct.                                                                                          
                                                                                                                                
Senator  Olson asked  whether  the proposed  bill  would change  the                                                            
amount of money  that the State would either pay or  collect through                                                            
the program.                                                                                                                    
                                                                                                                                
Co-Chair Green clarified  that, rather than the State collecting the                                                            
co-payments,  the co-payments  would be paid  to service  providers.                                                            
She shared  some the  co-payment  amounts. She  reiterated that  the                                                            
State's broadened  "asset eligibility"  requirements allow  Medicaid                                                            
coverage for individuals  earning significantly higher  incomes than                                                            
normally allowed.                                                                                                               
                                                                                                                                
Senator Olson  surmised that  this legislation  would not result  in                                                            
cost savings to the State.                                                                                                      
                                                                                                                                
Mr. Lindstrom agreed.                                                                                                           
                                                                                                                                
                                                                                                                                
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Senator  Hoffman  asked the  reason  the legislation  includes  cost                                                            
sharing language  if there  is no related  reduction in the  cost to                                                            
the State.                                                                                                                      
                                                                                                                                
Mr. Lindstrom  responded that language  is included in the  proposed                                                            
legislation  to allow the  State to pursue  higher cost-sharing  co-                                                            
payment  levels  with   program-eligible  women  in  "significantly                                                             
higher"  income brackets,  provided that future  changes in  federal                                                            
regulations allow for that option.                                                                                              
                                                                                                                                
Senator Hoffman asked whether  the State has attempted to expand the                                                            
existing cost-sharing language  in the Denali KidCare program, which                                                            
also provides benefits  to those with incomes higher than the normal                                                            
qualifying amounts.                                                                                                             
                                                                                                                                
Mr. Lindstrom  responded that, as  a result of a State inquiry,  the                                                            
federal government  ruled against including additional  cost sharing                                                            
language  in the  Denali KidCare  program  "barring  some change  in                                                            
federal law."                                                                                                                   
                                                                                                                                
Senator  Hoffman   asked  whether   the  Department  anticipates   a                                                            
different federal  ruling pertaining to the additional  cost sharing                                                            
language included  in this breast  and cervical cancer legislation.                                                             
                                                                                                                                
Mr.  Lindstrom responded  that  the  Department does  not  currently                                                            
anticipate a different  ruling; however, he reiterated, the language                                                            
is included  in this legislation in  anticipation of future  federal                                                            
changes regarding cost-sharing allowances.                                                                                      
                                                                                                                                
Co-Chair Wilken  asked the testifier  to clarify information  in the                                                            
fiscal note regarding  whether Alaska Native women,  who receive 100                                                            
percent  medical  coverage  through   Indian  Health  Services,  are                                                            
eligible for this program.                                                                                                      
                                                                                                                                
Mr. Lindstrom  responded that the federal government  has determined                                                            
that Native  women  could participate  in this  program. He  stated,                                                            
however,  that  the reason  for  there being  "fewer  billings  than                                                            
anticipated" for Native women is unclear.                                                                                       
                                                                                                                                
Co-Chair Green  informed the Committee that a financial  arrangement                                                            
has  been established   whereby the  Indian  Health  Services  would                                                            
reimburse  the State for  the breast and  cervical cancer  treatment                                                            
provided to Native women.  She continued that Native women could not                                                            
be denied this program.                                                                                                         
                                                                                                                                
Mr. Lindstom concurred with Co-chair Green's comments.                                                                          
                                                                                                                                
Senator  Hoffman   specified  that,  while  many  health   providers                                                            
contract  with  the federal  government  to  provide  services,  the                                                            
provider and the client  have the option to determine whether or not                                                            
to bill Indian Health Services,  an insurance company, or the State.                                                            
                                                                                                                                
Co-Chair Wilken  asked for further clarification regarding  language                                                            
in the fiscal note regarding  the expected growth rate; specifically                                                            
whether the growth rate would be five or ten percent.                                                                           
                                                                                                                                
Mr. Lindstrom  clarified that, while  there has been a five  percent                                                            
increase  in the number of  program participants,  there has  been a                                                            
ten percent increase  in program expenses due to the  rising cost of                                                            
health care.                                                                                                                    
                                                                                                                                
Co-Chair Wilken  summarized that program  expenditures are  expected                                                            
to increase at  twice the rate of the number of program  recipients.                                                            
                                                                                                                                
Mr. Lindstrom agreed.                                                                                                           
                                                                                                                                
Senator Taylor moved to  report SB 78 from Committee with individual                                                            
recommendations and the accompanying fiscal note.                                                                               
                                                                                                                                
There being  no objections,  SB 78  reported from  Committee  with a                                                            
$970.0 fiscal  note, dated February 24, 2003 from  the Department of                                                            
Health and Social Services.                                                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 10:49 AM.                                                                         

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