Legislature(2003 - 2004)

03/04/2004 09:02 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 04, 2004                                                                                      
                              9:02 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 30,  Side A                                                                                                            
SFC 04 # 30,  Side B                                                                                                            
SFC 04 # 31,  Side A                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:02 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Also  Attending:   DEB  DAVIDSON,  Staff  to Co-Chair  Green;  JANET                                                          
CLARKE, Director,  Division of Administrative  Services,  Department                                                            
of Health  and  Social Services;  PETE  KELLY, former  Senator,  and                                                            
Director,  State  Relations,  University  of  Alaska;  LINDA  PEREZ,                                                            
Administrative   Director,  Division  of  Administrative   Services,                                                            
Office  of  the  Governor;   DAN  SPENCER,  Director,   Division  of                                                            
Administrative  Services, Department  of Public Safety; MIKE  MAHER,                                                            
Director,  Division  of  Information  and Administrative   Services,                                                            
Department  of Environmental  Conservation;  DAN  EASTON,  Director,                                                            
Division of Water,  Department of Environmental Conservation;  LARRY                                                            
DIETRICK,  Director,  Division  of Spill  Prevention  and  Response,                                                            
Department of Environmental Conservation;                                                                                       
                                                                                                                                
Attending via Teleconference:   From an offnet location: PAT PITNEY,                                                          
Director   of  Budget   Development  and   Institutional   Planning,                                                            
University of Alaska                                                                                                            
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB   1-INCREASE AMT OF BASE STUDENT ALLOCATION                                                                                  
                                                                                                                                
The Committee adopted an  amendment. The bill was held in Committee.                                                            
                                                                                                                                
SB  35-APPROPRIATIONS: K-12, UNIVERSITY, CBRF                                                                                   
                                                                                                                                
The Committee  adopted a committee substitute and  reported the bill                                                            
from Committee.                                                                                                                 
                                                                                                                                
SB 257-APPROP: CAPITAL PROJECTS                                                                                                 
                                                                                                                                
The Committee heard presentations  from the Department of Health and                                                            
Social  Services,  the  University  of  Alaska, the  Office  of  the                                                            
Governor,  the Department  of Public  Safety and  the Department  of                                                            
Environmental  Conservation on their  budget requests. The  bill was                                                            
held in Committee.                                                                                                              
                                                                                                                                
Co-Chair   Green  recommended   Committee   members   begin   budget                                                            
subcommittee work.                                                                                                              
                                                                                                                                
Senator  Bunde  asked  the  timeframe  for presenting  subcommittee                                                             
budget closeouts to the full Committee.                                                                                         
                                                                                                                                
Co-Chair  Green stated she  would provide  that information,  noting                                                            
that scheduling adjustments  were necessary due to the Legislature's                                                            
commitment  to address  Alaska Permanent  Fund matters  the week  of                                                            
March 15.                                                                                                                       
                                                                                                                                
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 1                                                                                   
     "An Act relating to the base student allocation used in the                                                                
     formula for state funding of public education; and providing                                                               
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated this bill  "increases the student  dollar in                                                            
our  base  student   allocation  in  our  foundation   formula."  He                                                            
remarked,  "all of us  have heard  the school  bell; it's rung"  and                                                            
that that this  legislation is the  start of addressing the  need of                                                            
adequate funding for education.                                                                                                 
                                                                                                                                
AMENDMENT #1:  This amendment increases the base student  allocation                                                            
from the existing $4,169  currently provided in AS.14.17.470 and the                                                            
$4,263 amount proposed in the bill, to $4,576.                                                                                  
                                                                                                                                
Co-Chair Green  moved for adoption  and commented that although  she                                                            
supports this  legislation, this amendment would be  an improvement.                                                            
                                                                                                                                
AT EASE 9:05 AM / 9:06 AM                                                                                                       
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Co-Chair Green noted this  amendment would increase the base student                                                            
allocation, and  result in an approximately $82 million  increase to                                                            
the foundation  funding formula  distributed  across the state  over                                                            
the FY 04 budget year.                                                                                                          
                                                                                                                                
Senator  Bunde  asked the  increase  per  student over  the  current                                                            
funding amount.                                                                                                                 
                                                                                                                                
Co-Chair Green replied $407.                                                                                                    
                                                                                                                                
Senator Bunde asked the reason for this amount of increase.                                                                     
                                                                                                                                
Co-Chair  Green relayed  concerns  expressed regarding  funding  for                                                            
each school district,  along with the unanticipated  increased costs                                                            
of the Public  Employees Retirement  System (PERS) and the  Teachers                                                            
Retirement  System (TRS) and increased  insurance expenses  of up to                                                            
ten  percent, which  the school  districts  could  not control.  She                                                            
shared that she  has received comments from some districts  that she                                                            
has never before heard  from, that despite efforts to control costs,                                                            
increased  funding for these  expenses are  necessary. She  informed                                                            
that this funding  increase would allow districts  to budget for the                                                            
next two years.                                                                                                                 
                                                                                                                                
Senator Bunde  remarked that  his was "well  aware" of the  PERS/TRS                                                            
"problem" but  expected it should  be funded separately rather  than                                                            
"lock it in" to the base  student allocation. He supported utilizing                                                            
the earnings  reserve fund  for these expenses.  He also noted  that                                                            
although  this increase would  eliminate the  budget deficit  of the                                                            
Anchorage  School District,  it would  also increase  the  allowable                                                            
local  contribution.   He  characterized  this  proposal   as  "good                                                            
news/bad news."                                                                                                                 
                                                                                                                                
Co-Chair Green hoped that  most of the districts that have requested                                                            
the  legislature  solve the  funding  problem understand  that  this                                                            
proposed increase would  increase the local funding limits and allow                                                            
districts to  increase local contributions.  She remarked  that this                                                            
would  allow  community  members  to  "participate"  in  the  fiscal                                                            
situation  of their  school districts.  She also  expressed that  no                                                            
funding increases  would be requested the following  year, given the                                                            
total  increase   of  the  foundation  funding  formula   and  funds                                                            
generated  locally. She predicted  this increase  would address  the                                                            
PERS/TRS  situation for one  to two years,  although she  understood                                                            
that  a multiple  year solution  of five  to twenty  years would  be                                                            
required.  She remarked that  this increase  should convey  that the                                                            
legislature  is accepting responsibility  and that local  government                                                            
taxpayers and citizens should also accept responsibility.                                                                       
                                                                                                                                
Senator  Bunde  pointed out  that  24 districts  would  not  provide                                                            
increased  local contributions  because they  make no contributions                                                             
currently.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  commented   that  some  school  districts  do  not                                                            
contribute  to  the  education  expenses   in  their  community  and                                                            
therefore  those   districts  would  not  receive  increased   local                                                            
funding.                                                                                                                        
                                                                                                                                
Senator  Hoffman  asked  if  the  intention  is  that  the  PERS/TRS                                                            
expenses  would be  addressed  within  the base  student  allocation                                                            
funding, and whether  this funding would be sufficient  according to                                                            
school districts'  estimates. He understood from meetings  with some                                                            
school   district  representatives   that   this  funding  plus   an                                                            
additional one-time allocation is necessary.                                                                                    
                                                                                                                                
Co-Chair  Green   shared  that  the  funds  indicated   by  district                                                            
representatives  as necessary for  the PERS/TRS and other  increases                                                            
would be  provided for in  the amendment.  She predicted that  these                                                            
funds would be adequate  for most of the larger school districts but                                                            
qualified  that some  smaller districts  could have  an anomaly  and                                                            
require a different  solution. She stated that this  amendment would                                                            
provide  funding necessary  for the  PERS/TRS  increased expense  in                                                            
those districts she addressed.                                                                                                  
                                                                                                                                
Senator  Hoffman   pointed  out  this  funding  increase   would  be                                                            
statutory and  does not address the  operating budget. He  asked how                                                            
this proposal  compares to Governor  Murkowski's budget request  and                                                            
his plans, noting  that the Governor has announced  he would support                                                            
a draw from the CBR of  no more than $400 million for FY 05 and that                                                            
the  legislature  must  generate   an additional   $200  million  in                                                            
revenue,  while  this  amendment   would  increase  the  budget  $82                                                            
million.  Senator Hoffman  asked  if the  intent would  be that  the                                                            
legislature would  increase the amount of revenue  generated to $282                                                            
million,  or  reduce   other  appropriations  to  accommodate   this                                                            
increase. He recalled  the Governor's comments to  the Conference of                                                            
Alaskans emphasizing his  adamancy about dramatic budget reductions.                                                            
Senator Hoffman  asked Co-Chair Green  if the intent is to  meet the                                                            
Governor's  expectation of  withdrawing no  more than $400  from the                                                            
CBR.                                                                                                                            
                                                                                                                                
Co-Chair  Green  replied  that  this amendment  this  is  the  first                                                            
portion  of  the  budget  process  and  represents  an  $88  million                                                            
increase  for education.  She anticipated  that  the Governor  would                                                            
support  this funding increase  because he  supports education;  she                                                            
anticipated "great cooperation".                                                                                                
                                                                                                                                
Senator Hoffman supported  the concept of this amendment; however he                                                            
countered  that  the Governor  also  supports  operating  government                                                            
without withdrawals  from the CBR. He pointed out  that the governor                                                            
has a "red  pen" i.e. authority  to exercise  the line item  veto on                                                            
appropriation   legislation  and  has  the  final   say  unless  the                                                            
legislature overrides the  veto with a three-quarters majority vote.                                                            
Senator  Hoffman remarked  this is  a high standard.  He  emphasized                                                            
that he  supports education  funding but  needed assurance  from Co-                                                            
Chair  Green that  the  governor  would also  support  an  increased                                                            
budget and  not exercise the line  item veto authority to  limit the                                                            
CBR draw to $400 million.                                                                                                       
                                                                                                                                
Co-Chair Green  reiterated this is  the first portion of  the budget                                                            
process  and that  more  would be  known in  the coming  weeks.  She                                                            
informed that she has been in discussions with the Governor.                                                                    
                                                                                                                                
Senator Hoffman asked if  Governor Murkowski exercised the line item                                                            
veto, whether  the legislature  would "take  a stance" and  override                                                            
those vetoes.                                                                                                                   
                                                                                                                                
Senator  Hoffman agreed with  this increased  funding for  education                                                            
and  that  it  should   be  appropriated  before   the  end  of  the                                                            
legislative  session, provided  that the Senate  Minority's  goal to                                                            
spend monies from the CBR as a last option is achieved.                                                                         
                                                                                                                                
Senator  Bunde noted  he has  heard this  amendment  would cost  $82                                                            
million and also $88 million and asked the correct amount.                                                                      
                                                                                                                                
Co-Chair Wilken  stated that the cost  of SB 1, as amended  would be                                                            
$82 million.                                                                                                                    
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Wilken noted those present to testify to this bill.                                                                    
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
AT EASE 9:23 AM / 9:23 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 35                                                                                  
     "An Act making appropriations for the operating and loan                                                                   
     program  expenses of  state government,  for certain  programs,                                                            
     and to capitalize  funds; making appropriations  under art. IX,                                                            
     sec.  17(c), Constitution  of  the State  of  Alaska, from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken noted  this legislation,  sponsored  by the  Senate                                                            
Rules Committee  at the request of the Governor, proposes  the FY 04                                                            
operating  budget  and  was  first   heard  in  the  Senate  Finance                                                            
Committee on  April 14, 2003. He noted  the distribution  to members                                                            
of a proposed committee substitute, Version "U".                                                                                
                                                                                                                                
Senator Hoffman  distributed a legal opinion issued  by Tamara Cook,                                                            
Director  of the  Division  of Legal  and Research  Services,  dated                                                            
March 3,  2004, relating  to the principles  of the Public  Meetings                                                            
Act, specifically to adequate notice of hearings on legislation.                                                                
                                                                                                                                
Senator Hoffman  commented to the  importance to the public  to know                                                            
which legislation would  be heard in a committee. He understood that                                                            
a bill could  be brought before a  committee without advance  notice                                                            
if that bill had been previously  noticed for a hearing; however, he                                                            
remarked  it is  unreasonable  to expect  the public  to  adequately                                                            
track each bill that has had a previous hearing.                                                                                
                                                                                                                                
Senator  Hoffman was  unaware  that this  bill would  be brought  up                                                            
until late  the previous night and  cited the last paragraph  of the                                                            
aforementioned memorandum as follows.                                                                                           
                                                                                                                                
     The  Select Committee  on Legislative  Ethics  is charged  with                                                            
     determining  how the legislative ethics statutes,  including AS                                                            
     24.60.037, apply to  certain fact situations. (AS 24.60.160) I,                                                            
     frankly,  have no idea whether  any subject matter notice  of a                                                            
     meeting  is required under AS  24.60.037 or, if it is,  whether                                                            
     the  notice   provided  in  the   situation  you  describe   is                                                            
     inadequate   for  purposes   of  adhering   to  open   meetings                                                            
     principles. In any  case, advice I might give is not binding on                                                            
     the Select Committee. (AS 24.60.158)                                                                                       
                                                                                                                                
Senator  Hoffman stated  that  as a layperson,  he  was unsure  that                                                            
consideration  of this bill would meet the requirements  of the Open                                                            
Meetings  Act, so  he therefore  requested  a determination  by  the                                                            
Select Committee on Legislative  Ethics. He therefore requested that                                                            
no action  be taken on  this legislation  until adequate notice  has                                                            
been provided.                                                                                                                  
                                                                                                                                
Co-Chair Green  moved to adopt CS  SB 35, 23-GS1002\U, as  a working                                                            
document.                                                                                                                       
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Co-Chair  Green  explained  this committee  substitute  provides  an                                                            
increase to the education foundation funding formula.                                                                           
                                                                                                                                
AT EASE 9:28 AM / 9:28 AM                                                                                                       
                                                                                                                                
DEB DAVIDSON,  Staff to Co-Chair Green, detailed that  the committee                                                            
substitute appropriates  funds for K-12 education and the University                                                            
of Alaska  in  the amount  requested by  Governor  Murkowski in  his                                                            
proposed  FY  04  budget.  She  furthered  that  Section  3  of  the                                                            
committee substitute  contains standard  language to transfer  funds                                                            
from the Constitutional  Budget Reserve  (CBR) fund. Section  4, she                                                            
concluded,  provides  language  stipulating   that  contingent  upon                                                            
approval of access to the  CBR with a three-quarter-majority vote of                                                            
both bodies  of the legislation; an  additional appropriation  could                                                            
be made to K-12 education and the University of Alaska.                                                                         
                                                                                                                                
Senator Bunde  asked the  amount of funding  for FY 04 requested  by                                                            
the Governor.                                                                                                                   
                                                                                                                                
Ms. Davidson  replied that  the allocations  provided in Sections  1                                                            
and  2 for  K-12 education  and  the University  of  Alaska are  the                                                            
amounts requested  by the governor  based on the current  foundation                                                            
funding formula.                                                                                                                
                                                                                                                                
Senator  Bunde identified  the $82  million referenced  earlier  and                                                            
asked  if  $5.8 million  was  the  intended  appropriation  for  the                                                            
University of Alaska.                                                                                                           
                                                                                                                                
Ms. Davidson affirmed.                                                                                                          
                                                                                                                                
Senator Bunde asked the reason for this amount.                                                                                 
                                                                                                                                
Co-Chair  Green  responded   this  funding  is  intended  to  offset                                                            
increased   University  expenditures   for   the  Public   Employees                                                            
Retirement System  (PERS) and the Teachers Retirement  System (TRS).                                                            
                                                                                                                                
Senator Bunde  asked if the PERS/TRS cost to the University  is $5.8                                                            
million.                                                                                                                        
                                                                                                                                
Co-Chair  Green   answered  the  cost  is  higher,   and  that  this                                                            
appropriation would provide a portion of the necessary funds.                                                                   
                                                                                                                                
Senator Bunde  commented that this appropriation would  not fund the                                                            
entire amount,  despite the challenge  to raise the remaining  funds                                                            
necessary.                                                                                                                      
                                                                                                                                
Co-Chair  Green replied  that certain  employees  of the  University                                                            
might not  be included in  the PERS/TRS programs,  and instead  hold                                                            
federally funded or grant funded positions.                                                                                     
                                                                                                                                
Senator  Hoffman  requested  an  explanation  of  Section 4  of  the                                                            
proposed committee substitute.                                                                                                  
                                                                                                                                
Ms.  Davidson  explained   that  the  provision   of  Section  4  is                                                            
contingent  upon the approval of this  bill by a three-quarter  vote                                                            
of  the  legislature.  She  furthered   that  the  amount  of  money                                                            
appropriated in  this section occurs only upon legislative  approval                                                            
to access funds from the CBR.                                                                                                   
                                                                                                                                
Senator Hoffman  asked if only $82  million would be withdrawn  from                                                            
the CBR.                                                                                                                        
                                                                                                                                
Ms.  Davidson  could  not  say  the  exact   amount  that  would  be                                                            
appropriated from the CBR.  She noted that the CBR draw would be the                                                            
difference in the total  amount appropriated in the FY 05 budget and                                                            
the amount of  revenues received. She stated that  if the difference                                                            
is larger than $82 million,  the full amount might be withdrawn from                                                            
the CBR, but if the budget  gap were smaller, less would be required                                                            
from the CBR.                                                                                                                   
                                                                                                                                
Senator Hoffman reiterated  his comments in support of the committee                                                            
substitute to SB 1, but  cautioned against spending from the State's                                                            
savings account before  having a complete understanding of the total                                                            
financial position.  He stated that  spending from the general  fund                                                            
is better policy. He noted  that the legislature would be addressing                                                            
the operating  budget over the next few months and  recommended that                                                            
decisions  on this  matter be  delayed for  a few  days for  further                                                            
review.                                                                                                                         
                                                                                                                                
Senator  Olson remarked  that  the matter  in which  this  committee                                                            
substitute is  presented is uncommon. He pointed out  that Section 5                                                            
provides  that  authority  to  withdraw   funds  for  the  increased                                                            
education appropriation  from the  CBR would be retroactive  to July                                                            
1, 2003. He noted this  would affect two budget cycles, although the                                                            
time period to consider this action is limited.                                                                                 
                                                                                                                                
Co-Chair Wilken affirmed.                                                                                                       
                                                                                                                                
Senator Olson found this "highly unusual".                                                                                      
                                                                                                                                
Co-Chair Wilken  removed his objection and the committee  substitute                                                            
was ADOPTED.                                                                                                                    
                                                                                                                                
Co-Chair  Green remarked  that the  public is "fully  aware"  of the                                                            
dynamics of funding budgets  each year. She expressed intent to pass                                                            
a budget  that "fully funds  [education]  very early". She  disputed                                                            
Senator  Hoffman's  comments  regarding  spending from  the  State's                                                            
savings  account  first. She  cited  Ms. Davidson's  testimony  that                                                            
revenue in  relation to expenses is  considered first. She  informed                                                            
that currently  the amount of revenue generated is  strong and if it                                                            
continues to increase,  further discussion of an "ominous draw" from                                                            
the  CBR would  not  be an  issue.  She noted  that  economists  and                                                            
revenue forecasts  predict continued revenue increases,  which would                                                            
provide adequate  funds to  fully fund the  education increase.  She                                                            
spoke to  the need  to "hold  down" special  interest requests  that                                                            
would impact  the CBR.  She stressed  that if  funds were  withdrawn                                                            
from the CBR they should  be for education expenses. She stated this                                                            
is the reason  for the provisions  in the committee substitute.  She                                                            
expected  that  school  districts  would  be  appreciative  of  this                                                            
legislation  after many  years of  requests. She  suggested that  if                                                            
some Committee  members  require additional  time  to consider  this                                                            
proposal,  they have not  been listening to  the needs of  districts                                                            
for several years.                                                                                                              
                                                                                                                                
Senator B. Stevens  supported modification of SB 1  and he supported                                                            
an appropriation bill that  provides for the funding increase for K-                                                            
12 education.  He  remarked  that this  concept "puts  forward"  the                                                            
priority  of the  twenty-third  legislature, which  is Kindergarten                                                             
through University of Alaska  education. He was willing to commit up                                                            
to  42 percent  of  the budget  "up  front"  to education  to  allow                                                            
educators to  "know their budget"  and to eliminate the question  of                                                            
whether  adequate  funding  is  available  for  the  increased  base                                                            
student  allocation.  He accessed  that  adequate funding  would  be                                                            
available  in the State budget  to fund this  increase in FY  05 and                                                            
future  years. He  pointed  out that  multiple funding  sources  are                                                            
available  to the  legislature to  appropriate.  He reiterated  that                                                            
increased funding  for education is  "priority number one"  and once                                                            
addressed would allow consideration of other matters.                                                                           
                                                                                                                                
Senator  Hoffman "wholeheartedly"  agreed,  funding education  makes                                                            
good public policy;  however, he stressed that general  funds should                                                            
be  used.   He  questioned  a proposal  to  utilize CBR  funds  when                                                            
general  funds  were  available.  He  suggested  that  if  increased                                                            
education  funding is  the number  one priority,  then it should  be                                                            
funded from  the general  fund with only a  simply majority  vote of                                                            
the legislature, rather than from the CBR, which requires a three-                                                              
quarter majority vote of  the legislature to authorize. He announced                                                            
he would likely  vote in favor of this bill, but against  the motion                                                            
relating  to  the  effective  date.   He  indicated  he  would  then                                                            
reconsider  the  proposal   after  the  bill  passed  the  House  of                                                            
Representatives and was before the Senate again.                                                                                
                                                                                                                                
Senator Hoffman  recalled the initial  legislation that established                                                             
the CBR  account, noting  he served  as chair  of the House  Finance                                                            
Committee  when it was  debated and  was therefore  informed  on the                                                            
subject.  He stressed  the  intent that  the  CBR be  utilized as  a                                                            
savings  account   only  after  all   aspects  of  the  budget   are                                                            
considered, including public  safety and health care appropriations.                                                            
                                                                                                                                
Senator  Olson also supported  increased funding  for education  but                                                            
found  the  proposal  to  appropriate  from  CBR  objectionable.  He                                                            
acknowledged  that  the  public  might  be aware  of  the  budgetary                                                            
process,  but pointed out  that not permitting  public testimony  on                                                            
the matter  prevents the legislature  from being fully aware  of the                                                            
situation.                                                                                                                      
                                                                                                                                
Senator  Bunde relayed  discussions  he has  had  with school  board                                                            
representatives  in which he learned that districts  are required to                                                            
issue "pink  slips" to staff and employees  if adequate funding  for                                                            
positions  is in  question.  He stressed  the benefit  of  providing                                                            
assurance of this funding as soon as possible.                                                                                  
                                                                                                                                
Senator  Bunde  continued   that  the  oil  and  revenue   forecasts                                                            
predicting  the future  of the CBR  have always  been incorrect.  He                                                            
doubted that  an annual budget  would not  require funding  from the                                                            
CBR,  and therefore  argued that  the issue  of  granting access  to                                                            
withdraw funds from the CBR is irrelevant.                                                                                      
                                                                                                                                
Senator B. Stevens pointed  out this legislation does not specify an                                                            
amount that  would be withdrawn  from the  CBR, but rather  provides                                                            
for a withdrawal of the amount necessary.                                                                                       
                                                                                                                                
Co-Chair  Green offered  a motion  to report CS  SB 35, 23-GS1002\U                                                             
from Committee with individual recommendations.                                                                                 
                                                                                                                                
Senator Hoffman  objected and spoke  to the Public Meetings  Act. He                                                            
charged that adequate  public notice was not provided  and asked why                                                            
action could not be delayed until the following Monday.                                                                         
                                                                                                                                
Co-Chair  Wilken  noted  the  original  version  of  SB 35  was  the                                                            
proposed FY 04 operating  budget, and that this committee substitute                                                            
is a  simple appropriation  that does  not require  several days  to                                                            
understand. He  stressed the importance to expedite  the legislation                                                            
and assured that opportunity  would be available to further consider                                                            
the legislation.                                                                                                                
                                                                                                                                
Senator  Dyson commented  that he  prefers a  significant amount  of                                                            
time  to consider  matters,  but was  satisfied that  the  education                                                            
funding increase  is near the amount  the Governor has proposed  for                                                            
education funding  and therefore did not require additional  time to                                                            
review  the  legislation.  He added  that  he  considers  amendments                                                            
offered on  the Senate floor to be  questionable in their  adherence                                                            
to the public  notice provisions of  the Public Meetings  Act, given                                                            
that Senators are provided  no time to consider the implications. He                                                            
surmised  that the offering  of this committee  substitute is  not a                                                            
unique practice.                                                                                                                
                                                                                                                                
                                                                                                                                
SFC 04 # 30, Side B 09:50 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Wilken  asked if Senator  Dyson was speaking to  the motion                                                            
to report the bill from Committee.                                                                                              
                                                                                                                                
Senator Dyson  replied that he was speaking to the  objection to the                                                            
motion. He  informed that  he tried to attend  and participate  in a                                                            
Minority  Caucus meeting  that had  been publicly  noticed, but  was                                                            
asked to leave.                                                                                                                 
                                                                                                                                
Co-Chair  Wilken directed  the Members  to cease  commenting on  the                                                            
Open Meetings Act.                                                                                                              
                                                                                                                                
Co-Chair  Green told of  "endless" correspondence  relaying  "pleas"                                                            
from many  organizations  representing education  and children.  She                                                            
remarked  that this legislation  represents  the requests and  would                                                            
allow districts to plan their budget year.                                                                                      
                                                                                                                                
Senator Hoffman  removed his objection citing his  earlier comments.                                                            
                                                                                                                                
Senator  Olson pointed  out  that Section  3  of the  bill does  not                                                            
specify  the  amount  that  would  be withdrawn  from  the  CBR  and                                                            
expressed his apprehension of "signing a blank check".                                                                          
                                                                                                                                
Co-Chair  Wilken  commented this  Committee  has "heard  the  school                                                            
bell; it's  been rung." He continued,"  This legislation  is the way                                                            
that we can answer the call.                                                                                                    
                                                                                                                                
There was no objection and CS SB 35 (FIN) MOVED from Committee.                                                                 
                                                                                                                                
AT EASE 9:53 AM / 9:55 AM                                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 257                                                                                                        
     "An  Act   making  capital  appropriations   and  supplemental                                                             
     appropriations;     capitalizing     funds;    making     other                                                            
     appropriations;  making  appropriations   under art.  IX,  sec.                                                            
     17(c), Constitution  of the State of Alaska;  and providing for                                                            
     an effective date."                                                                                                        
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
The  Committee  continued   hearing  overviews  of  capital   budget                                                            
requests.                                                                                                                       
                                                                                                                                
Department of Health and Social Services                                                                                      
                                                                                                                                
     Emergency Medical  Services Ambulances and Equipment Statewide-                                                            
     Match for Code Blue Project                                                                                                
     $325,000 ASLC Dividend                                                                                                     
     Reference No.: 33797                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     The request  will provide funding to match federal  dollars and                                                            
     other  funding  to  purchase  ambulances  and  other  emergency                                                            
      medical equipment needed in rural Alaskan communities.                                                                    
                                                                                                                                
JANET  CLARKE,  Director,   Division  of  Administrative   Services,                                                            
Department of Health and Social Services,                                                                                       
                                                                                                                                
AT EASE 9:56 AM / 9:56 AM                                                                                                       
                                                                                                                                
Ms. Clarke noted  that extensive information about  this program has                                                            
been provided  to the Committee in the past. She reminded  that this                                                            
funding  would be  utilized  to purchase  lifesaving  equipment  for                                                            
volunteers.                                                                                                                     
                                                                                                                                
Senator Dyson  asked if the Department of Transportation  and Public                                                            
Facilities owned these vehicles.                                                                                                
                                                                                                                                
Ms. Clarke  answered no.  She described the  grant program  in which                                                            
local  governments   or  volunteer   emergency  organizations   have                                                            
ownership of the vehicles.                                                                                                      
                                                                                                                                
     E-Grants                                                                                                                   
     $204,000                                                                                                                   
          $67,300 Federal Receipts                                                                                              
          136,700 G/F Match                                                                                                     
     Reference No.: 39148                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     Phased Project - New                                                                                                       
     Design and build an  automated system for the management of all                                                            
     aspects  of  grant  administration,   including  on-line  grant                                                            
     application, award and reporting.                                                                                          
                                                                                                                                
Ms.  Clarke  indicated  she  had  provided  members   with  detailed                                                            
information outlining  the intended use of this appropriation  [copy                                                            
on file.]                                                                                                                       
                                                                                                                                
Ms. Clarke informed  that the Department provides  over $165 million                                                            
in grants to local non-profit  organizations, which is a "very paper                                                            
intensive" process. She  told of funding that would be requested for                                                            
FY 06 to complete this project.                                                                                                 
                                                                                                                                
Co-Chair Wilken  asked whether this  project is modeled after  other                                                            
states.                                                                                                                         
                                                                                                                                
Ms. Clarke  replied that  the Department  surveyed other states  and                                                            
found  that many have  not undertaken  these  efforts. She  reported                                                            
that the Department  has been reviewing those that  have implemented                                                            
an automated system and  that sufficient information is available on                                                            
the procedures and software programs employed.                                                                                  
                                                                                                                                
     Denali   Commission  Grants   for  Non-Primary  Care   Facility                                                            
     Improvements                                                                                                               
     $10,000,000 Federal Receipts                                                                                               
     Reference No.: 39823                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     This  request   will  provide  funding  for  rural   hospitals,                                                            
     behavioral  health  facilities and  assisted  living homes  for                                                            
     planning,  design, medical  equipment,  and construction.  This                                                            
     request  consists  of federal  funds  that are  granted to  the                                                            
     Department  of  Health  and Social  Services  from  the  Denali                                                            
     Commission.                                                                                                                
                                                                                                                                
Ms. Clarke  informed that the Denali  Commission requested  that the                                                            
Department   administer  approximately   $3.5  million  granted   to                                                            
hospitals across the State,  as the Denali Commission was unprepared                                                            
to interact  directly  with hospitals.  The Denali  Commission,  she                                                            
stated,  therefore requested  to "tap into"  the Department's  grant                                                            
administration infrastructure.  She noted that the Denali Commission                                                            
has agreed  that a portion of the  $10 million could be utilized  to                                                            
fund  an additional  staff  position  within  the  grant  management                                                            
section.                                                                                                                        
                                                                                                                                
Co-Chair Green asked whether  utilizing a State agency to administer                                                            
federal grants  and subsequently receive  a percentage of  the grant                                                            
funding, is  a new concept in state  government. She asked  how this                                                            
program would  evolve, expressing  concern  that if the grants  were                                                            
discontinued,  whether the Department  would be forced to  eliminate                                                            
the federally funded position.                                                                                                  
                                                                                                                                
Ms. Clarke replied  that the funding source for this  staff position                                                            
is categorized  as CIP receipts, and that the intent  is to maintain                                                            
a core  staff within the  agency that could  be funded with  capital                                                            
funds. She  assured that  the Department  avoids over-staffing,  and                                                            
that  in  the  event  of  a  reduction  in  capital  infrastructure                                                             
development,  staff holding certain  positions are aware  that their                                                            
positions would be eliminated.                                                                                                  
                                                                                                                                
Co-Chair  Green acknowledged  this is the  "factual side",  but that                                                            
reality is  different. She  exampled other  pilot projects  in which                                                            
federal  funding  was used  to establish  a  program,  but were  not                                                            
provided  to  continue   the  services.  In  these  instances,   she                                                            
contended  that  the  State  is  "seen  as the  bad  guy"  when  the                                                            
legislature does not appropriate  State funds. She cautioned against                                                            
allowing  this  to  occur  with  this  proposal.  She  recognized  a                                                            
division between the State  and the Denali Commission, acknowledging                                                            
that the  efforts of the  Denali Commission  have received  acclaim,                                                            
but are  not included  in  the State  budget. She  wanted to  insure                                                            
against interdependency.                                                                                                        
                                                                                                                                
Co-Chair Wilken  furthered that many items in the  State budget rely                                                            
on "outside money" and  that programs remain even if those funds are                                                            
no longer  available.  He agreed that  if this  proposal is  a pilot                                                            
project, it  should be ensured that  federal funding would  continue                                                            
once the program is established.                                                                                                
                                                                                                                                
Senator Olson noted the  project description for this item indicates                                                            
the Department  intends to  utilize up to  two-percent of the  funds                                                            
for administrative  costs associated with administering  the grants.                                                            
He asked  the percentage  of the  funds that would  be utilized  for                                                            
hospital and non-primary care facilities.                                                                                       
                                                                                                                                
Ms. Clarke replied  that the amount would be the difference  between                                                            
the  $10 million  appropriation  and the  two percent  withheld  for                                                            
administrative expenses.                                                                                                        
                                                                                                                                
Senator Olson calculated the amount differently.                                                                                
                                                                                                                                
Ms. Clarke  responded  that two  percent is  an estimate  negotiated                                                            
with  the Denali  Commission  and that  the difference  is likely  a                                                            
"rounding issue".                                                                                                               
                                                                                                                                
     Replacement  of the  Public Health  Center  and Pioneers'  Home                                                            
     Telephone Systems                                                                                                          
     $206,400                                                                                                                   
          $21,400 Federal Receipts                                                                                              
          185,000 G/F Match                                                                                                     
     Reference No.: 37964                                                                                                       
     Category: Health/Social Services                                                                                           
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     One-Time Project                                                                                                           
     The phone systems  in the Fairbanks, Mat-Su and Interior Health                                                            
     Centers  and the Sitka,  Ketchikan and  Juneau Pioneers'  Homes                                                            
     are  over  10 years  old  and  in need  of  replacement.  These                                                            
     facilities  are  pubic facilities  that provide  vital  medical                                                            
     services  and residential  services. These  facilities  need to                                                            
     have reliable  phone service  in order to serve the  public and                                                            
     their clients  on a daily basis. This request  provides funding                                                            
     to replace the aging phone systems in six facilities.                                                                      
                                                                                                                                
Ms.  Clarke informed  that  when the  Department  began planning  to                                                            
implement  telemedicine   systems,  they  were  directed   to  delay                                                            
purchase  of new phone  systems.  She emphasized  the dependence  of                                                            
these facilities on phone systems.                                                                                              
                                                                                                                                
     Juneau Family Birth Center Land Purchase                                                                                   
     $150,000 ASLC Dividend                                                                                                     
     Reference No.: 39287                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Juneau Areawide                                                                                                  
     Election District: Juneau Areawide                                                                                         
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     This request  will provide grant  funds directly to  the Juneau                                                            
     Family Birth Center  to purchase land for construction of a new                                                            
     community family center in Juneau.                                                                                         
                                                                                                                                
Ms. Clarke  directed attention to  an aerial photograph showing  the                                                            
land in question [not provided].  She stated it was deemed important                                                            
that this  project have  State investment  given other partners  the                                                            
Center  is  seeking and  the  design  of the  project.  She  assured                                                            
Senator Dyson  that this  facility does not  perform abortions.  She                                                            
also noted  that 80 percent of the  facility's revenue is  generated                                                            
from billings with the remainder received in grants.                                                                            
                                                                                                                                
Co-Chair Wilken pointed  out that this appropriation is necessary to                                                            
secure  additional funding  from the  Rasmussen  Foundation and  the                                                            
Murdock  Foundation. He asked  whether this  appropriation  is "good                                                            
faith money".                                                                                                                   
                                                                                                                                
Ms. Clarke affirmed.                                                                                                            
                                                                                                                                
     Mental   Health  -  Deferred   Maintenance  and  Accessibility                                                             
     Improvements                                                                                                               
     $400,000  Mental  Health Trust  Authority  Authorized  Receipts                                                            
     (MHTAAR)                                                                                                                   
     Reference No.: 33670                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     This  program makes  capital funds available  on a competitive                                                             
     basis  to Mental  Health Trust  service  provider agencies  for                                                            
     deferred   maintenance  and   accessibility  improvements   for                                                            
     program facilities.                                                                                                        
                                                                                                                                
Ms. Clarke reminded that  this item has been included in the capital                                                            
budget for several years.                                                                                                       
                                                                                                                                
     Mental Health  - Essential Program Equipment  Grants to Service                                                            
     Providers                                                                                                                  
     $350,000 MHTAAR                                                                                                            
     Reference No.: 33672                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     The  request  will provide  capital  equipment  grants  through                                                            
     competitive  RFP [request for  proposals] process for  agencies                                                            
     providing  services, activities and programs  for Mental Health                                                            
     Trust beneficiaries.  Priority would be made  to fund providers                                                            
     who do  not have the minimum  of computer equipment  to be able                                                            
     to  adequately  mange  the  new  Alaska Automated  Information                                                             
     Management System for behavioral health.                                                                                   
                                                                                                                                
Ms. Clarke  noted this item  has also been  included in the  capital                                                            
budget for many  years. She told of the requests received  by senior                                                            
citizens and disabled for these grants.                                                                                         
                                                                                                                                
     Mental Health - Van/Vehicle and Housing Modifications for                                                                  
     Families or Individuals                                                                                                    
     $300,000 MHTAAR                                                                                                            
     Reference No.: 33671                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     This project  provides housing  and vehicle modification  funds                                                            
     for people  with special needs. Vehicle modification  funds are                                                            
     for  individual  with  developmental  disabilities  or  special                                                            
     needs  for  their  families for  modifications  to  make  their                                                            
     vehicles accessible.                                                                                                       
                                                                                                                                
Ms. Clarke stated  this special appropriation is not  related to the                                                            
Department   of  Transportation   and  Public   Facilities   special                                                            
transportation  coordination program. Rather, she  explained program                                                            
is directed  to undertaking  vehicle  modifications  for those  with                                                            
special disabilities  along with housing  modifications.  She stated                                                            
these efforts  allow  the recipients  to remain  in their homes  and                                                            
subsequently  provide the Department  "a lot of bang for  the buck."                                                            
                                                                                                                                
Senator Hoffman  requested a list of communities that  have received                                                            
these funds and the specific years of the allocations.                                                                          
                                                                                                                                
Ms. Clarke  pointed out that this  budget request shows anticipated                                                             
State general fund and  mental health matching funds of $300,000 for                                                            
the years of FY  05 through FY 10. However, she noted  that the full                                                            
amount has not  always been appropriated in the past.  She responded                                                            
to Senator  Olson's  request  informing a  bi-annual  list has  been                                                            
maintained, but not an annual list.                                                                                             
                                                                                                                                
     Mental Health - Transitional Housing                                                                                       
     $500,000 MHTAAR                                                                                                            
     Reference No.: 38368                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     The project will fund capital construction costs to build                                                                  
     services   enriched   transitional  housing   for  individuals                                                             
     recovering from substance abuse disorders.                                                                                 
                                                                                                                                
Ms.  Clarke explained  this  funding  would be  used  on a  thorough                                                            
competitive   basis   for   nonprofit   organizations   to   provide                                                            
transitional  housing. She informed  that some form of transitional                                                             
housing is necessary for  recovery of some patients. She stated that                                                            
the Mental Health Trust Authority supports this use of funds.                                                                   
                                                                                                                                
     Mental  Health - Fairbanks  Detoxification  Unit Expansion  and                                                            
     Renovation                                                                                                                 
     $1,450,000 Federal Mental Health Funds                                                                                     
     Reference No.: AMD38366                                                                                                    
     Category: Health/Human Services                                                                                            
     Location: Fairbanks (Fairbanks/Fort Wainwright)                                                                            
     Election District: Fairbanks/Fort Wainwright                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     This   project   will  provide   capital   funding  to   expand                                                            
     detoxification  services in the Fairbanks area  to those unable                                                            
     to obtain  medical detoxification  services due to the  current                                                            
     limited  capacity.  This  population  is  largely  composed  of                                                            
     Mental Health Trust  beneficiaries under the Chronic Alcoholism                                                            
     with Psychosis criteria.                                                                                                   
                                                                                                                                
Ms.  Clarke  informed  that  the amendment  to  this  project  would                                                            
require   a  title   change   to  the   project   description.   She                                                            
characterized this as a  federal project utilizing Denali Commission                                                            
funding.   She   stated  this   proposal   would   utilize   funding                                                            
appropriated the previous  year for consideration of a new facility.                                                            
                                                                                                                                
     Mental Health  - Treatment-Based Special Needs  Housing Program                                                            
     $400,000                                                                                                                   
        $250,000 Alaska Housing Finance Corporation (AHFC)                                                                      
                     Dividend                                                                                                   
           150,000 MHTAAR                                                                                                       
     Reference No.: 37901                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     The Department  of Health and Social Services  program provides                                                            
     funding   to   develop   special  needs   housing   for   Trust                                                            
     beneficiaries  that  cannot  be funded  under  AHFC because  of                                                            
     statutory limitations.                                                                                                     
                                                                                                                                
Ms. Clarke  explained that  the AHFC is statutorily  unable  to fund                                                            
these  projects  directly because  of  treatment  programs  operated                                                            
within the facilities.                                                                                                          
                                                                                                                                
      Mental Health - Consumer Designed and Managed Projects                                                                    
     $250,000 MHTAAR                                                                                                            
     Reference No.: 34042                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     Proposals request funds to plan or carry out consumer-run                                                                  
     facility and community projects.                                                                                           
                                                                                                                                
Ms. Clarke  gave as an example the  program operated at the  Polaris                                                            
House  and Ionia,  Inc. in  which  participants learn  to  determine                                                            
appropriate   mental  health  treatment.   She  indicated   she  has                                                            
photographs  showing the success  of this  program, which she  could                                                            
provide if requested.                                                                                                           
                                                                                                                                
Senator  Hoffman asked the  communities where  these facilities  are                                                            
located.                                                                                                                        
                                                                                                                                
Ms.  Clarke responded  Ionia  Inc.  is located  in Kasilof  and  the                                                            
Polaris  House is  located  in Juneau  and  that she  would  provide                                                            
information on other locations.                                                                                                 
                                                                                                                                
      Mental Health - Medicaid Review and Enhancement Project                                                                   
     $300,000 MHTAAR                                                                                                            
     Reference No.: 39033                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     Medicaid Review and Enhancement Project for all four                                                                       
     beneficiary groups. Approximately 50% of the funding will be                                                               
     limited to the Division of Senior and Disability Services.                                                                 
                                                                                                                                
Ms. Clarke read  a portion of the project description  justification                                                            
language as follows.                                                                                                            
                                                                                                                                
     This project will explore, develop, and implement ways to use                                                              
     Medicaid to fund new services or maximize resources for                                                                    
     existing services to underserved beneficiaries.                                                                            
                                                                                                                                
Ms. Clarke emphasized any  recommendations would have to comply with                                                            
the cost containment directive from the legislature.                                                                            
                                                                                                                                
     Mental Health - Provider Resource Sharing and Coordination                                                                 
     $150,000 MHTAAR                                                                                                            
     Reference No.: 34039                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     Fund will be used to pilot recommendations at the local or                                                                 
     regional provider level and provide resources to make changes                                                              
     at the State level (i.e. regulatory changes).                                                                              
                                                                                                                                
Ms. Clarke stated the intent  of this item is to investigate methods                                                            
to  engineer   and  re-engineer   the  delivery   of  services   and                                                            
coordination between nonprofit organizations.                                                                                   
                                                                                                                                
     Mental Health - Update Issues Affecting Economic Well-Being of                                                             
     Alaska Seniors                                                                                                             
     $30,000 MHTAAR                                                                                                             
     Reference No.: 39029                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     This request will fund a study that will determine the impact                                                              
     of a reduction in senior income and the resulting effect on                                                                
     the safety net to provide senior services.                                                                                 
                                                                                                                                
Ms. Clarke explained  this project would update a  report undertaken                                                            
a few years prior.                                                                                                              
                                                                                                                                
University of Alaska                                                                                                          
                                                                                                                                
PAT  PITNEY,  Director  of  Budget  Development  and  Institutional                                                             
Planning, University  of Alaska, testified  via teleconference  from                                                            
an offnet  location and  referenced the  publication titled  "Fiscal                                                            
Year 2005 Operating  & Capital Budget  Requests, Executive  Summary"                                                            
[copy on file],  which she stated  represents the Board of  Regents'                                                            
budget proposal.                                                                                                                
                                                                                                                                
It was  determined  that Committee  Members would  identify  project                                                            
requests they wished to have overviewed.                                                                                        
                                                                                                                                
Co-Chair  Wilken   asked  if  the   projects  were  listed   in  the                                                            
publication in priority order.                                                                                                  
                                                                                                                                
Ms. Pitney affirmed.                                                                                                            
                                                                                                                                
     Integrated Science Facility                                                                                                
     UAA, Anchorage                                                                                                             
     State Appropriation: $13,600,000                                                                                           
     Total Project Cost (FY 05-10): $46,400,000                                                                                 
                                                                                                                                
Ms.  Pitney  informed  that  this project  is  the  Board's  highest                                                            
priority.  She reported  that  the first  phase was  funded  through                                                            
bonds  approved  by voters  in the  general  election  of two  years                                                            
prior.  She  said the  funds  requested  for  the next  phase  would                                                            
provide  necessary classrooms  vital to health  and science  courses                                                            
and classroom  laboratories. She noted  that current activities  are                                                            
"very  constrained". She  stated that  the estimated  total  project                                                            
cost increased  to  $70 million  with $46.4  million remaining.  She                                                            
noted the original cost estimate was $54.8 million                                                                              
                                                                                                                                
PETE  KELLY,   former  Senator,  and   Director,  State   Relations,                                                            
University  of Alaska,  added  that $8.4  million  has already  been                                                            
appropriated  from the general obligation  bonds approved  by voters                                                            
two years prior.  He relayed these funds could be  utilized for some                                                            
planning and construction expenses.                                                                                             
                                                                                                                                
Senator  B.  Stevens  commented  this  was  the first  he  heard  of                                                            
increase cost of the project, and asked the reason.                                                                             
                                                                                                                                
Ms. Pitney replied  that the increased costs were  identified as the                                                            
planning  process progressed.  She noted that  the Board of  Regents                                                            
only recently approved the increase.                                                                                            
                                                                                                                                
Senator B.  Stevens pointed  out the increase  is almost 30  percent                                                            
and he requested  an itemized presentation of the  changes. He asked                                                            
when the original cost estimates were calculated.                                                                               
                                                                                                                                
Co-Chair  Kelly  responded  that design  changes  are  necessary  to                                                            
accommodate  a larger  influx  of students  than  anticipated  three                                                            
years  ago. He  also noted  constructions  costs in  the State  have                                                            
increased substantially.                                                                                                        
                                                                                                                                
Co-Chair Wilken requested a further outline of this project.                                                                    
                                                                                                                                
     Replacement of Research Vessel                                                                                             
     $80,000 Federal Receipts                                                                                                   
     Reference No.: 38921                                                                                                       
     Category: University                                                                                                       
     Location: Juneau Areawide                                                                                                  
     Election District: Juneau Areawide                                                                                         
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     The request is for federal receipt authority for a federal                                                                 
     appropriation to replace the Alpha Helix Research Vessel.                                                                  
                                                                                                                                
Senator Dyson asked the source of the federal funding.                                                                          
                                                                                                                                
Ms.  Pitney  answered  the funds  would  be  appropriated  from  the                                                            
National Oceanic  and Atmospheric  Administration (NOAA).  She added                                                            
that the  University of  Alaska would become  the administrator  and                                                            
manager of  the ship. She  told of the use  of the ship by  NOAA and                                                            
the process  in  which the  University serves  as the  agent of  the                                                            
ship.                                                                                                                           
                                                                                                                                
Senator Dyson  asked if the University  of Alaska becomes  the owner                                                            
of the ship.                                                                                                                    
                                                                                                                                
Ms.  Pitney affirmed  and  noted the  University  conducts  research                                                            
utilizing the vessel as well.                                                                                                   
                                                                                                                                
Senator Dyson asked when the ship would be commissioned.                                                                        
                                                                                                                                
Ms. Pitney  replied it would be commissioned  three years  from now.                                                            
                                                                                                                                
Senator  Dyson  commented  that  the  research  vessel  program  has                                                            
undertaken  "wonderful projects".  He requested  specifications  and                                                            
preliminary  drawings and the plans  for manning the new  vessel, as                                                            
well as the plans for the  current ship once it is replaced. He also                                                            
asked where the new vessel would be home ported.                                                                                
                                                                                                                                
Ms. Pitney  replied the new vessel  would be home ported  in Seward,                                                            
noting that  the existing dock must  be modified to accommodate  the                                                            
new vessel.                                                                                                                     
                                                                                                                                
Senator Dyson  understood that  the use of  federal funds for  State                                                            
vessels often  contains provisions  to allow  the vessel to  be used                                                            
during a state of emergency.  He asked if this provision is included                                                            
in this project as well.                                                                                                        
                                                                                                                                
Office of the Governor                                                                                                        
                                                                                                                                
                                                                                                                                
     National and International Marketing and Development of Alaska                                                             
     Resources and Products                                                                                                     
     $1,000,000 AHFC Dividend                                                                                                   
     Reference No.: 39284                                                                                                       
     Category: Development                                                                                                      
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2007                                                                           
     One-Time Project                                                                                                           
     Promotions, research and development of Alaska's resources and                                                             
     products including oil and gas.                                                                                            
                                                                                                                                
LINDA PEREZ,  Administrative  Director, Division  of Administrative                                                             
Services, Office  of the Governor,  reminded that $1.02 million  was                                                            
appropriated  in  1997  for this  purpose,  and  that a  balance  of                                                            
$113,000  remains. She  informed that  the intent  is to  "replenish                                                            
this  fund  to support  the  Governor's  priorities  to  expand  and                                                            
develop Alaska's resources".                                                                                                    
                                                                                                                                
Co-Chair Wilken asked if  a business plan indicating how these funds                                                            
would be spent has been developed.                                                                                              
                                                                                                                                
Ms. Perez replied one has  not been developed but offered to provide                                                            
a history of past expenditures.                                                                                                 
                                                                                                                                
Senator  B. Stevens  requested  a  breakdown  of the  resources  and                                                            
markets that would be targeted.                                                                                                 
                                                                                                                                
Ms. Perez stated she would provide this information.                                                                            
                                                                                                                                
      Arctic National Wildlife Refuge Oil and Gas Development                                                                   
     $500,000 ASLC Dividend                                                                                                     
     Reference No.: 39283                                                                                                       
     Category: Development                                                                                                      
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2007                                                                           
     On-Going Project                                                                                                           
     Advocate the state's interest in opening the Arctic National                                                               
     Wildlife Refuge to oil and gas development.                                                                                
                                                                                                                                
Ms.  Perez   reported  that  a  fund   intended  to  promote   ANWAR                                                            
development  was  established   in  1993  and  this  request  is  to                                                            
replenish the account, given that efforts are still underway.                                                                   
                                                                                                                                
     Pacific Coastal Salmon Recovery Fund                                                                                       
     $20,868,000 Federal Receipts                                                                                               
     Reference No.: AMD33647                                                                                                    
     Category: Natural Resources                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2008                                                                           
     On-Going Project                                                                                                           
     Federal fiscal year 2004 (FFY04) appropriations legislation                                                                
     contains  funding for the Pacific Coastal Salmon  Recovery Fund                                                            
     (PCSRF).  Coordination of individual  state funding  is through                                                            
     the respective  Governor's offices.  The Alaska portion  of the                                                            
     FFY04  appropriation  is $20.9  million. Funding  comes to  the                                                            
     state  through  a Memorandum  of  Understanding  with the  U.S.                                                            
     Department  of Commerce  designating the  Alaska Department  of                                                            
     Fish and Game as the program manager.                                                                                      
                                                                                                                                
Ms. Perez reminded that the Department of Fish and Game has                                                                     
testified to this item.                                                                                                         
                                                                                                                                
     Replace the  Voter Registration and Election  Management System                                                            
     (VREMS)                                                                                                                    
     $5,450,000 Election Fund                                                                                                   
     Reference No.: 39040                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2007                                                                           
     Phased Project - Underway                                                                                                  
     Replace the  Voter Registration and Election  Management System                                                            
     (VREMS) and  continue meeting the mandates of  the Help America                                                            
     Vote Act of 2002 (HAVA).                                                                                                   
                                                                                                                                
Co-Chair Wilken asked if this project would utilize the remainder                                                               
of the federal funds appropriated for the implementation of HAVA.                                                               
                                                                                                                                
Ms. Perez answered it would not.                                                                                                
                                                                                                                                
Co-Chair Wilken pointed out expenditures to date has been $14                                                                   
million.                                                                                                                        
                                                                                                                                
     Americans with Disabilities Act Compliance Projects                                                                        
     $100,000 General Funds                                                                                                     
     Reference No.: 6391                                                                                                        
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2006                                                                           
     On-Going Project                                                                                                           
     This  project continues  the  removal of  physical barriers  to                                                            
     persons  with  disabilities within  state-owned  facilities  as                                                            
     required  by Title II of the  Americans with Disabilities  Act,                                                            
     Public Las 101-336.  Funding covers the cost of design, project                                                            
     administration,   and  construction.   Aside  from   the  legal                                                            
     requirements,  removal  of physical  barriers  will negate  the                                                            
     need for  temporary program modifications  which are  currently                                                            
     required  of the facilities'  occupants.  Office of  Management                                                            
     and  Budget allocates  available funding  to the Department  of                                                            
     Transportation   (DOT)  for   state  facility  ADA   compliance                                                            
     projects  based  upon  DOT's  prioritized   project  list.  The                                                            
     requested  FY 2005 funds will continue work from  the statewide                                                            
     priority list.                                                                                                             
                                                                                                                                
Ms. Perez stated this funding has been included in the budget for                                                               
many years.                                                                                                                     
                                                                                                                                
     DELETE: Vessel and Aircraft Maintenance for ADF&G and DPS                                                                  
     $0                                                                                                                         
     Reference No.: AMD39282                                                                                                    
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     Original  vessels  and aircraft  deferred  maintenance  funding                                                            
     placeholder  project  of  $899,600  is now  split  between  the                                                            
     Departments  of Fish  and Game  and Public  Safety and  project                                                            
     funding requested by those departments.                                                                                    
                                                                                                                                
Ms. Perez explained the request was included in the original Office                                                             
of the Governor budget proposal.                                                                                                
                                                                                                                                
Co-Chair Wilken commented this item has been overviewed in the                                                                  
budget requests of other departments.                                                                                           
                                                                                                                                
Department of Public Safety                                                                                                   
                                                                                                                                
     Law Enforcement Equipment Replacement                                                                                      
     $600,000 General Funds                                                                                                     
     Reference No.: 37774                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     Purchase of new and  replacement law enforcement equipment used                                                            
     by  the Alaska  State Troopers.  The Division  of Alaska  State                                                            
     Troopers  which  now includes  the  Alaska Bureau  of  Wildlife                                                            
     Enforcement, rely  upon capital improvement project funding for                                                            
     those types  of equipment purchases for day-to-day  operations.                                                            
                                                                                                                                
DAN SPENCER, Director, Division of Administrative Services,                                                                     
Department of Public Safety, outlined this request.                                                                             
                                                                                                                                
     Aircraft and Vessel Repair and Maintenance                                                                                 
     $749,600 General Funds                                                                                                     
     Reference No.: AMD6121                                                                                                     
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     The Department  of Public Safety  annually requests  repair and                                                            
     maintenance  funds  for the  DPS  aircraft and  vessels.  These                                                            
     funds   are  for  the  repair,   replacement  and  maintenance                                                             
     requirements  of this department's  aircraft and vessel  fleet.                                                            
     For  example, the  funds  will be  used to  rebuild vessel  and                                                            
     aircraft  engines and components when they reach  the limits of                                                            
     safe  useful life.  Large marine  diesel  engines and  aircraft                                                            
     engines  require expert  vendors  to rebuild  them. Many  other                                                            
     components  of  vessels  and  aircraft must  be  maintained  or                                                            
     replaced  routinely  to ensure  safe operating  conditions  and                                                            
     comply with various safety regulations.                                                                                    
                                                                                                                                
Mr.  Spencer noted  this  request  was originally  included  in  the                                                            
Governor's  proposed budgets  for the  Office of  the Governor,  the                                                            
Department of Fish and  Game and the Department of Public Safety. He                                                            
outlined  this  annual  project for  keeping  aircraft  and  vessels                                                            
operational  and  to  meet  Federal Aviation  Administration   (FAA)                                                            
standards.                                                                                                                      
                                                                                                                                
     Public Safety Aircraft, Vessel and Parts Sales                                                                             
     $572,900 General Fund/Program Receipts                                                                                     
     Reference No.: AMD38439                                                                                                    
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2008                                                                           
     One-Time Project                                                                                                           
     Sale   of  four  aircraft  and   surplus  aircraft   parts  and                                                            
     accessories  and thirteen vessels and surplus  vessel parts and                                                            
     accessories.                                                                                                               
                                                                                                                                
Mr. Spencer  informed  that this item  is a  companion to  Reference                                                            
Number  6121,  Aircraft  and  Vessel  Repair   and  Maintenance.  He                                                            
explained  this  item would  allow  the  revenue  from the  sale  of                                                            
aircraft  and  surplus  parts  to fund  maintenance  and  repair  of                                                            
retained equipment.                                                                                                             
                                                                                                                                
     Firefighting Breathing Apparatus Replacement                                                                               
     $112,500 General Funds                                                                                                     
     Reference No.: 37785                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     One-Time Project                                                                                                           
     Purchase  45  self contained  breathing  apparatus  (SCBA)  and                                                            
     related  equipment  used to  conduct  basic and  advanced  fire                                                            
     training at the three  state operated regional training centers                                                            
     in  Anchorage,  Fairbanks  and  Juneau.  These  new  units  are                                                            
     necessary to comply  with national equipment standards and OSHA                                                            
     regulations.                                                                                                               
                                                                                                                                
Mr.  Spencer reminded  that  one-half of  the requested  funds  were                                                            
appropriated  for this project the  previous fiscal year.  He stated                                                            
that  due to the  importance  of this  equipment  the Department  is                                                            
requesting the remaining funds in this budget.                                                                                  
                                                                                                                                
     Rural Trooper Housing Repairs and Renovation                                                                               
     $147,500 General Funds                                                                                                     
     Reference No.: 38995                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     The Department's  Rural Trooper Housing program  provides state                                                            
     owned employee housing  in rural Alaska locations where housing                                                            
     is  traditionally scarce.  This project  will fund repairs  and                                                            
     renovation of these  state-owned units, all of which were built                                                            
     30 years or more ago.                                                                                                      
                                                                                                                                
Mr. Spencer  reported  that 15 housing  units are  old and have  not                                                            
been maintained.  He warned of the  expensive repair costs  in rural                                                            
areas if pipes freeze and break.                                                                                                
                                                                                                                                
Senator  Dyson  asked whether  local  craftspeople  and contractors                                                             
would  be  employed  to  undertake  these  maintenance   and  repair                                                            
projects.                                                                                                                       
                                                                                                                                
Mr.  Spencer was  unsure  the  residency  of previous  workers,  but                                                            
assumed local contractors  and laborers would be utilized because of                                                            
faster response times.                                                                                                          
                                                                                                                                
Senator Dyson asked if  the contracts for these projects are subject                                                            
to labor agreements.                                                                                                            
                                                                                                                                
Mr. Spencer indicated he would research the matter.                                                                             
                                                                                                                                
     Training Academy Handgun Range Repairs                                                                                     
     $45,000 General Funds                                                                                                      
     Reference No.: 39000                                                                                                       
     Category: Public Protection                                                                                                
     Location: Sitka                                                                                                            
     Election District: Sitka/Wrangell/Petersburg                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     One-Time Project                                                                                                           
     This project funds needed repairs to the Department of Public                                                              
     Safety Training Academy's handgun range.                                                                                   
                                                                                                                                
Mr. Spencer reported that officers must undergo updated training                                                                
operations. He told of the bullet holes at the facility and the                                                                 
necessity to shoot in certain directs to avoid those holes.                                                                     
                                                                                                                                
                                                                                                                                
SFC 04 # 31, Side A 10:40 AM                                                                                                    
                                                                                                                                
                                                                                                                                
     Statewide Facilities Maintenance                                                                                           
     $37,500 General Funds                                                                                                      
     Reference No.: 38976                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     Facilities Maintenance for DPS occupied, state-owned buildings                                                             
     in 14 communities throughout Alaska.                                                                                       
                                                                                                                                
Mr. Spencer commented on the insignificant amount of this request.                                                              
                                                                                                                                
     Additional Village Pubic Safety Officers for Rural Bootlegging                                                             
     Prevention & Enforcement Activities                                                                                        
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: ADM39352                                                                                                    
     Category: Law and Justice                                                                                                  
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     Federal funding to hire and equip additional Village Public                                                                
     Safety Officers to engage primarily in bootlegging prevention                                                              
     and enforcement activities.                                                                                                
                                                                                                                                
Mr. Spencer informed that up to ten-percent of this appropriation                                                               
would be retained by the Department for administrative expenses.                                                                
                                                                                                                                
Co-Chair Wilken asked if the expectation is this program would be                                                               
ongoing.                                                                                                                        
                                                                                                                                
Mr. Spencer was unsure.                                                                                                         
                                                                                                                                
Senator Bunde remarked  that some federal grants for law enforcement                                                            
activities  create an obligation for  the State to continue  funding                                                            
programs  and positions.  He asked  if this  is the  case with  this                                                            
grant.                                                                                                                          
                                                                                                                                
Mr. Spencer was not aware that the State would be required to                                                                   
assume financial responsibility in this instance.                                                                               
                                                                                                                                
     Rural Law Enforcement Training and Equipment                                                                               
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: 38479                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2006                                                                           
     One-Time Project                                                                                                           
     The  Department  of  Justice,  Office   of Community   Oriented                                                            
     Policing  Services,  is expected  to  award the  Department  of                                                            
     Public Safety $2,000,000  to train law enforcement personnel in                                                            
     rural locations  to increase their ability to  deal with crisis                                                            
     situations  and to purchase equipment  for better responses  to                                                            
     emergencies.                                                                                                               
                                                                                                                                
Mr. Spencer noted this funding would allow rural law enforcement to                                                             
be as well equipped as possible.                                                                                                
                                                                                                                                
Co-Chair Wilken asked if these efforts have always been funded with                                                             
federal appropriations.                                                                                                         
                                                                                                                                
Mr. Spencer answered yes.                                                                                                       
                                                                                                                                
     Statewide Illegal Drug and Alcohol Use                                                                                     
     $2,000,000 Federal Receipts                                                                                                
     Reference No.: 38477                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 10/01/2004 - 06/30/2006                                                                           
     One-Time Project                                                                                                           
     Rural  Alaska continues  to  suffer serious,  life threatening                                                             
     effects  from use of  illicit drugs  and alcohol. This  federal                                                            
     grant  will allow  the state  to enhance the  efforts of  state                                                            
     troopers,  local law enforcement, and community  policing teams                                                            
     to reduce  illicit drugs and alcohol. The use  of these illicit                                                            
     substances  increases the prevalence of violent  crimes such as                                                            
     homicide,  sexual assaults, robberies, burglaries,  and serious                                                            
     domestic violence assaults.                                                                                                
                                                                                                                                
Mr. Spencer stated  the State has received this grant  funding for a                                                            
couple of years. He reported  that bootlegging continues to be a big                                                            
issue in the Bush.  He stated that the Department  of Public Safety,                                                            
in conjunction  with the Department of Law to dedicate  a prosecutor                                                            
position as a member of the team addressing these matters.                                                                      
                                                                                                                                
     Marine Fisheries Patrol Improvements                                                                                       
     $1,080,300 Federal Receipts                                                                                                
     Reference No.: 35825                                                                                                       
     Category: Public Protection                                                                                                
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 10/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     The  Alaska  State  Legislature  urged  the  division  to  seek                                                            
     additional  funds for its patrol  efforts in federal  waters of                                                            
     the  North Pacific  Ocean  and Bering  Sea. This  project  is a                                                            
     result  of  lengthy  negotiations   with  the  National  Marine                                                            
     Fisheries  Service. Federally regulated marine  fisheries occur                                                            
     on a  year-round basis  in the coastal  and offshore waters  of                                                            
     the  State of Alaska.  Both the federal  and state governments                                                             
     share  an interest in ensuring  these fisheries are  protected.                                                            
                                                                                                                                
Mr. Spencer explained the  federal funds are utilized to support the                                                            
costs  of enforcement,  noting that  the Alaska  Bureau of  Wildlife                                                            
Enforcement addresses both State and federal matters.                                                                           
                                                                                                                                
     Emergency Vehicle Operation Drivers Training Range                                                                         
     $650,000 Federal Receipts                                                                                                  
     Reference No.: 38998                                                                                                       
     Category: Public Protection                                                                                                
     Location: Sitka                                                                                                            
     Election District: Sitka/Wrangell/Petersburg                                                                               
     Estimated Project Dates: 10/01/2003 - 06/30/2006                                                                           
     One-Time Project                                                                                                           
     This  project  allows  use  of federal  funds  expected  to  be                                                            
     available  for  planning   and construction   of  an  emergency                                                            
     vehicle  operation drivers training  range at the Pubic  Safety                                                            
     Training Academy in Sitka.                                                                                                 
                                                                                                                                
Mr. Spencer expressed the  intent is to acquire land adjacent to the                                                            
Academy  and  construct  a driving  course.  He  told  of  emergency                                                            
responses and  the higher incidences  of crashes due to the  type of                                                            
driving required. He stressed  the need to provide the best training                                                            
possible,  adding that emergency  workers  in rural communities  are                                                            
unable  to practice  high speed  driving.  He also  shared that  the                                                            
Department  is attempting  to secure federal  funding to purchase  a                                                            
simulator,  but informed that  simulators are  not as effective  for                                                            
training as actual driving.                                                                                                     
                                                                                                                                
AT EASE 10:45 AM / 10:46 AM                                                                                                     
                                                                                                                                
Department of Environmental Conservation                                                                                      
                                                                                                                                
Co-Chair  Wilken  referenced  a report  issued  by the  Division  of                                                            
Legislative  Audit and  a spreadsheet  outlining  the allocation  of                                                            
funds to the Village Safe Water Program since 1985.                                                                             
                                                                                                                                
MIKE MAHER,  Director, Division  of Information  and Administrative                                                             
Services, Department  of Environmental Conservation,  testified that                                                            
the budget  request for FY  05 is reduced  from the current  year by                                                            
approximately  $24 million  and also contains  no general funds.  He                                                            
reminded  that the  previous budget  was funded  with AHFC  Dividend                                                            
funds, noting that this request also includes ASLC Bond funds.                                                                  
                                                                                                                                
     Village Safe Water Project Administration                                                                                  
     $2,125,900                                                                                                                 
          $ 531,500 AHFC Dividend                                                                                               
          1,594,400 Federal Receipts                                                                                            
     Reference No.: 33820                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This proposed project  provides funding for the operating costs                                                            
     of  the Village  Safe  Water  Program.  It contributes  to  the                                                            
     agency's  End Result  2 -- Citizens  are Protected from  Unsafe                                                            
     Sanitary  Practices.  Drinking  water and  sewerage  facilities                                                            
     constructed  with  grant  funds protect  rural  residents  from                                                            
     unsafe sanitary practices.                                                                                                 
                                                                                                                                
DAN   EASTON,   Director,   Division   of   Water,   Department   of                                                            
Environmental  Conservation,   reminded  that  this  program  issues                                                            
grants to the  State's smallest communities  for water projects.  He                                                            
pointed  out the program  utilizes  70 percent  federal funding  and                                                            
that the  amount is the same  as the previous  year. He stated  that                                                            
this funding is included  in the operating budget, as it is utilized                                                            
for engineers travel expenses and other operational costs.                                                                      
                                                                                                                                
Senator Dyson  asked if the Village Safe Water projects  were listed                                                            
in priority order.                                                                                                              
                                                                                                                                
Mr. Easton answered  the projects are listed in alphabetical  order.                                                            
                                                                                                                                
Senator  Dyson  expressed  concerns   about  the  oversight  of  the                                                            
administration  of  the program  as identified  in  the Division  of                                                            
Legislative Audit  report. He wanted assurance that  the problems do                                                            
not exist or that they are being addressed.                                                                                     
                                                                                                                                
     Statewide Contaminated Sites Cleanup                                                                                       
     $3,000,000 Oil/Haz Fund                                                                                                    
     Reference No.: 33826                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2009                                                                           
     On-Going Project                                                                                                           
     This project  funds assessment and cleanup of  highest priority                                                            
     state-owned  sites  or sites  where  the responsible  party  is                                                            
     unknown  or  has  refused  to  take  appropriate  action.  Work                                                            
     includes  assessment, clean up,  monitoring, and site  closure.                                                            
     These projects will  contribute directly to the department' end                                                            
     result of protecting  the environment by cleaning up historical                                                            
     contaminated sites.                                                                                                        
                                                                                                                                
LARRY  DIETRICK,   Director,  Division   of  Spill  Prevention   and                                                            
Response,  Department of  Environmental Conservation,  stated  these                                                            
funds would address  29 priority sites, 22 of which  are State-owned                                                            
facilities.  He stated  that  the remaining  seven  sites have  been                                                            
identified  as high  priority, although  securing  funding for  this                                                            
effort  from the  responsible  parties  has  been determined  to  be                                                            
unfeasible.  He noted  this request  is  $2 million  lower than  the                                                            
amount appropriated  the previous year due to a declined  balance of                                                            
the Oil and Hazard Fund.                                                                                                        
                                                                                                                                
     Spill Response VHF Communications Upgrade                                                                                  
     $300,000 Oil/Haz Fund                                                                                                      
     Reference No.: 38899                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     Phased - New Project                                                                                                       
     This project  provides funding to replace an  aging VHF two-way                                                            
     radio  communications  system.  The  system  includes  handheld                                                            
     radios,  vehicle radios and repeaters  in Prince William  Sound                                                            
     and  Cook Inlet that  were installed in  the late 80's  and are                                                            
     nearing  the end of their life  expectance. Spare parts  are no                                                            
     longer  available. This  project contributes  to Department  of                                                            
     Environmental  Conservation's   end result  of  protecting  the                                                            
     environment by making  timely response and cleanup of pollution                                                            
     possible.  As the State's primary  response agency for  oil and                                                            
     hazardous  materials  incidents,  Department  of Environmental                                                             
     Conservation  must  have a  reliable communications  system  to                                                            
     ensure  responders  quickly deploy  spill  resources,  mitigate                                                            
     environmental  damage, and enhance  recovery of damaged  areas.                                                            
                                                                                                                                
Mr. Dietrick reported that the current system is so old that                                                                    
replacement parts are not longer available.                                                                                     
                                                                                                                                
     Statewide Hazardous Materials Response                                                                                     
     $300,000 Oil/Haz Fund                                                                                                      
     Reference No.: 38898                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     One-Time Project                                                                                                           
     This  project protects  public  health and  the environment  by                                                            
     making  timely  response  and cleanup  of  hazardous  materials                                                            
     possible.   It  provides  funding  to  sustain   the  Statewide                                                            
     Hazardous     Materials    Response    Team     by;    maintain                                                            
     readiness/response  capabilities  for primary teams  located in                                                            
     Anchorage,  Fairbanks,  Valdez  and Southeast  Alaska;  provide                                                            
     training  classes and exercises  in communities at risk  from a                                                            
     release   of  toxic   chemicals;  conducting   a  major   joint                                                            
     federal/state/local  hazardous  materials response exercise  to                                                            
     test capabilities  and increase awareness; and funding training                                                            
     and equipment replacement/upgrades.                                                                                        
                                                                                                                                
Mr. Dietrick stated this project would relieve the State from                                                                   
primarily undertaking these efforts, and instead allow                                                                          
participation from federal and local entities.                                                                                  
                                                                                                                                
Mr. Dietrick informed that chemical releases from canneries are a                                                               
high risk. He added that this funding represents the State                                                                      
contribution to maintain the capability.                                                                                        
                                                                                                                                
     Municipal Water, Sewer  and Solid Waste Matching Grant Projects                                                            
     $6,742,600                                                                                                                 
          $6,498,100 ASLC Bonds                                                                                                 
             244,500 Federal Receipts                                                                                           
     Reference No.: 33824                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This   proposed  project   provides  funding   for  grants   to                                                            
     communities   to  construct   water,  sewer  and  solid   waste                                                            
     facilities.  It contributes  to  the agency's  End Result  2 --                                                            
     Citizens   are  Protected  from   Unsafe  Sanitary   Practices.                                                            
     Drinking  water  and  wastewater  facilities  constructed  with                                                            
     grant  funds protect citizens  from unsafe sanitary  practices.                                                            
                                                                                                                                
Mr. Easton misspoke  and stated the amount of this  appropriation at                                                            
$7.8 million.                                                                                                                   
                                                                                                                                
Mr. Easton stated  that unlike the Village Safe Water  Program, this                                                            
item relates to projects  undertaken in larger communities. He noted                                                            
this  program requires  up to  15 percent  matching  funds from  the                                                            
local government,  depending upon  the population of the  community.                                                            
He also  pointed  out this  funding  request is  approximately  $2.7                                                            
million less than the current fiscal year appropriation.                                                                        
                                                                                                                                
Co-Chair  Wilken pointed  out  that although  no  general funds  are                                                            
requested  for  capital  projects  for  FY  05,  general  funds  are                                                            
anticipated for this and other items in future years.                                                                           
                                                                                                                                
Senator B.  Stevens asked the amount  of general funds utilized  for                                                            
this project  in previous  years. He also  requested a breakdown  of                                                            
funding to be  requested in future years for projects  undertaken in                                                            
the prior four years.                                                                                                           
                                                                                                                                
Mr. Easton replied he would gather that information.                                                                            
                                                                                                                                
     Village Safe Water Feasibility Studies                                                                                     
     $1,222,500                                                                                                                 
          $305,800 AHFC Bonds                                                                                                   
           916,700 Federal Receipts                                                                                             
     Reference No.: 33821                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This  proposed project  provides  funding for  grants to  small                                                            
     communities to plan  water and sewer facilities. It contributes                                                            
     to the  agency's End  Result 2 -- Citizens  are Protected  from                                                            
     Unsafe   Sanitary  Practices.   Drinking  water  and   sewerage                                                            
     facilities   constructed   with  grant   funds  protect   rural                                                            
     residents from unsafe sanitary practices.                                                                                  
                                                                                                                                
Mr.  Easton   noted   this  funding   request  is   a  decrease   of                                                            
approximately   $1.4   million   from  the   current   fiscal   year                                                            
appropriation.  He explained  this item relates  to the engineering                                                             
studies that "form the  basis" of the Village Safe Water Program and                                                            
are used to match communities with appropriate projects.                                                                        
                                                                                                                                
Senator Bunde asked if  local matching funds are required to receive                                                            
these grants.                                                                                                                   
                                                                                                                                
Mr. Easton  replied that  no local matching  funds are required  for                                                            
the Village Safe Water Program.                                                                                                 
                                                                                                                                
     Village Safe Water Projects                                                                                                
     $78,046,800                                                                                                                
          $19,512,500 AHFC Bonds                                                                                                
           58,534,300 Federal Receipts                                                                                          
     Reference No.: 33822                                                                                                       
     Category: Health/Human Services                                                                                            
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2009                                                                           
     State Match Required                                                                                                       
     On-Going Project                                                                                                           
     This  proposed project  provides  funding for  grants to  small                                                            
     communities   to   design  and   construct   water  and   sewer                                                            
     facilities.  It contributes  to  the agency's  End Result  2 --                                                            
     Citizens   are  Protected  from   Unsafe  Sanitary   Practices.                                                            
     Drinking  water and sewerage facilities constructed  with grant                                                            
     funds protect  rural residents from unsafe sanitary  practices.                                                            
                                                                                                                                
Mr. Easton informed  this funding request is approximately  the same                                                            
as the  appropriation  for the  current  fiscal year.  He noted  the                                                            
individual projects  are detailed in 46 budget allocation  requests.                                                            
                                                                                                                                
Co-Chair Wilken referenced  the aforementioned spreadsheet detailing                                                            
the funding allocated to  various projects. He asked if the database                                                            
includes previous projects and planned projects.                                                                                
                                                                                                                                
Mr. Easton affirmed and  noted previous funding amounts are included                                                            
in the database.                                                                                                                
                                                                                                                                
Co-Chair  Wilken  acknowledged   the  efforts  of  the  Division  to                                                            
organize and detail the projects.                                                                                               
                                                                                                                                
Co-Chair  Wilken  recalled  concerns  expressed  by  Co-Chair  Green                                                            
resulting in  the Division of Legislative  Audit report.  He relayed                                                            
that Co-Chair  Green requested  the budget  subcommittee review  the                                                            
audit and identify  ways to "fix…some  past transgressions  and past                                                            
practices"  that were perhaps  "inappropriate  or well managed".  He                                                            
surmised  Co-Chair  Green's intent  is that  this  review effort  be                                                            
ongoing in future years.                                                                                                        
                                                                                                                                
Mr. Easton commented  that the Village Safe Water  Program "is not a                                                            
stranger to audits." Most  audits of the program, he noted, focus on                                                            
accounting  of funds and  whether funds  are properly appropriated,                                                             
and that the findings  have indicated no discrepancies.  He disputed                                                            
much of  the findings in  the current audit,  opining that  auditors                                                            
have trouble  understanding construction  and the confusion  results                                                            
in recommendations   the Division  does not  always  agree with.  He                                                            
noted that Senator  Dyson has requested a more detailed  response to                                                            
the audit.                                                                                                                      
                                                                                                                                
Senator Dyson reiterated  that the Department disagrees with much of                                                            
the findings of the audit.                                                                                                      
                                                                                                                                
Mr. Maher reported  that since audit  was issued the Department  has                                                            
considered  more  involvement  of  the  Division  of Administrative                                                             
Services as well  as establishing a procurement position  within the                                                            
Division  to   oversee  appropriations.   He  qualified   that  such                                                            
oversight  is  not always  appropriate.  He  assured  that  internal                                                            
methods to address the issue are under consideration.                                                                           
                                                                                                                                
Senator B. Stevens noted  that as a member of the Legislative Budget                                                            
and Audit  Committee  he is satisfied  with the  Village Safe  Water                                                            
Program.  He understood  that  abuses occurred  in the  past and  he                                                            
wanted assurances that  they would not reoccur. He also stressed the                                                            
importance that  these issues are addressed, cautioning  that abuses                                                            
jeopardize the entire program.                                                                                                  
                                                                                                                                
Senator Bunde  furthered that  the abuses  referenced by Senator  B.                                                            
Stevens could not be considered  acceptable construction procedures.                                                            
He contended  that the discrepancies  in the  audit are not  because                                                            
auditors do not understand construction practices.                                                                              
                                                                                                                                
Mr. Maher shared  that the Department  directed the Human  Resources                                                            
Manager to  review the  audit and identify  any ethical violations.                                                             
The review,  according  to Mr. Maher  found no  such violations.  He                                                            
assured  the Department  is  taking  the  information  in the  audit                                                            
seriously.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  stated that the audit would not be  debated at this                                                            
time; rather, the budget  subcommittee would review the matter under                                                            
the direction of Senator Dyson.                                                                                                 
                                                                                                                                
Senator  Dyson commented  he did  not "want  to raise  the level  of                                                            
expectations."  He explained that  the budget subcommittee  would be                                                            
unable to fully investigate the matter without significant                                                                      
resources.                                                                                                                      
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 11:07 AM                                                                          

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