Legislature(1993 - 1994)
02/17/1993 09:00 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 17, 1993
9:00 a.m.
TAPES
SFC-93, #27, Side 2 (558-end)
SFC-93, #29, Side 1 (000-304)
CALL TO ORDER
Senator Steve Frank, Co-chair, convened the meeting at
approximately 9:00 a.m.
PRESENT
In addition to Co-chairman Frank, Senators Kelly, Kerttula,
Sharp and Jacko were present. Senator Rieger arrived soon
after the meeting began. Co-chair Pearce arrived as it was
in progress.
ALSO ATTENDING: Darrel Rexwinkel, Commissioner, Dept. of
Revenue; Rod Mourant, Assistant Commissioner, Dept. of
Revenue; Cheryl Frasca, Director, Division of Budget Review,
Office of Management and Budget; Gary Bader, Director,
Administrative Services, Dept. of Education; Janet Clarke,
Director, Division of Administrative Services, Dept. of
Health & Social Services; Jan Hansen, Director, Division of
Public Assistance, Dept. of Health and Social Services; Nico
Bus, Chief, Financial Services, Dept. of Natural Resources;
John Cramer, Director, Division of Agriculture, Dept. of
Natural Resources; Dave Kelleyhouse, Director, Division of
Wildlife Conservation, Dept. of Fish and Game; Alicia D.
Porter, Alaska Environmental Lobby; Doug and Opal Welton;
Teresa Sager-Stancliff, aide to Senator Mike Miller; and
aides to committee members and other members of the
legislature.
SUMMARY INFORMATION
SB 46 - Act authorizing moose farming.
Discussion was had with staff to Senator
Miller, Dept. of Fish and Game, Dept. of Natural
Resources, Alaska Environmental Lobby,
Doug and Opal Welton. The bill was then
HELD in committee for additional review.
SB 100 - Act making supplemental and special
appropriations for the expenses of state
government; making, amending,
and repealing capital and
operating appropriations; and
providing for an effective
date.
Review of Secs. 1 through 34 of the
supplemental was conducted by Cheryl Frasca.
The bill was HELD in committee for review of
the remaining sections.
SENATE BILL NO. 100
An Act making supplemental and special
appropriations for the expenses of state
government; making, amending, and repealing
capital and operating appropriations; and
providing for an effective date.
Cross Reference - Supplemental Funding for FY 93 was
ultimately
incorporated within CCS SB 165.
CONFERENCE CS FOR SENATE BILL NO. 165
An Act making an appropriation to the Alyeska
Settlement Fund and making appropriations from the
Alyeska Settlement Fund; making, amending, and
repealing operating and capital appropriations;
and providing for an effective date.
Co-chairman Frank directed attention to a spread sheet
accompanying the bill and noted that the supplemental totals
$40 million in general funds and $8 million in other funds.
CHERYL FRASCA, Director, Division of Budget Review, Office
of Management and Budget, came before committee. She
explained that the supplemental is considerably less than
recent years. The administration attempted to limit it to
items beyond management control.
The $1,350,250 for the longevity bonus program reflects an
increase in the number of applicants to the program.
The $383,000 for the public defender represents an increase
in the number of cases presented for defense. The agency is
caseload driven with minimal control over the number of
clients it must serve. In response to a subsequent question
from Co-chair Frank, Ms. Frasca explained that last year the
public defender agency received an unallocated reduction of
$570.0. It took steps to consolidate administrative
functions with the office of public advocacy and made other
efforts to streamline operations. OMB has been most
supportive of that. The agency is, however, caseload driven
by court appointments and has little discretion in the
number of cases assigned. The agency has been traditionally
underfunded. A supplemental is not uncommon. The same is
true of the office of public advocacy. The FY 94 budget is
based on FY 93 funding plus the requested supplemental.
Senator Kerttula spoke to pressures placed upon the agency
by the judiciary.
The $200,000 for RATNET reflects a savings the department
had hoped to achieve by issuing a competitive bid request
for uplink service. The request for proposals was unable to
be issued as soon as intended. The projected savings was
thus not realized. If the funding is not provided, the
department will either shut down the system the last two
months of the fiscal year or severely cut back the number of
broadcast hours.
In response to a question from Co-chair Frank, Ms. Frasca
explained that an $138,000 reduction was taken in last
year's budget for RATNET based on intent to competitively
bid uplink services which presently cost approximately
$74,000 a month. That amount is currently paid to Alascom.
Since the bid has not issued, projected savings have not
been realized.
Senator Rieger inquired regarding the difference between the
$200,000 request and the $138,000 reduction. Ms. Frasca
advised that she would have to review the question with the
department.
Senator Kerttula inquired concerning the political share of
uplink service. Ms. Frasca said that she would obtain that
information and report back to committee.
Speaking to the $64,000 for the personnel board, Ms. Frasca
said that costs are associated with the increased number of
hearings as a result of complaints. Funding pays for
special counsel and hearing officers. Travel costs for the
board and support staff are funded through the budget for
the division of personnel. It is difficult to anticipate
how many complaints will be filed in a given year. The
supplemental request last year was $90,000.
Ms. Frasca further explained that the personnel board does
not handle employee grievances. It deals with ethics
complaints concerning the Governor, Lt. Governor, or
attorney general. Three complaints were filed. Costs
associated with hearings are not budgeted items. The
supplemental request is based on need for $24,000 for
special counsel in one case, $10,000 in another, a hearing
officer for $15,000, and anticipated special counsel costs
of $15,000.
The $616,400 for the office of public advocacy results from
the fact that the agency, like the public defender, is
caseload driven. In addition to consolidation of
administrative functions, staff has taken leave without pay
in an effort to contain costs. Senator Sharp commented that
agencies with "open door policies" such as public advocacy
and the public defender feel they have "an open door to the
vault." They have no cost constraints upon who they take,
how they screen them, etc. He raised questions regarding
the qualifications of those receiving these public services
and advised that he would not support the supplemental.
Senator Kelly concurred in the latter comments.
Senator Kerttula noted that the legislature wrote the law
enacting the agencies. Senator Kelly suggested that they
were formatted as a result of court decisions.
Ms. Frasca noted that the administration has introduced
legislation allowing the office of public advocacy to
collect fees for public guardians as well as other cost
saving measures.
The $30,400 request for EPORS results from three new
retirees into the system and increased health insurance
costs. It is difficult to anticipate when elected officials
will choose to retire.
The $642,900 for leasing reflects last year's legislative
underfunding of $1 million. The requested amount is needed
to meet lease obligations for the current fiscal year.
Senator Kerttula inquired regarding attempts to gain control
of state leasing. Ms. Frasca pointed to E.O 87, which she
explained would consolidate leasing activities into a new
entity within the Dept. of Transportation and Public
Facilities. Much of the emphasis will be management of
currently leased space as well as planning for future needs.
The $400,000 supplemental for prosecution, within the Dept.
of Law, represents an area that received a reduction of
$530,000 in FY 93. In response to that cut back, the
department laid off three prosecutors, a paralegal, and two
clerical persons. The Governor does not want to absorb
further reductions in this area. Co-chair Frank suggested
that the request appears to be an exception to the
supplemental focus on items beyond agency control. Ms.
Frasca said that the unallocated reduction taken at the end
of the legislative session cut deeply into the prosecution
effort. If the supplemental is not funded, deletions will
have to be made in other areas of the current budget, or
more serious reductions in prosecution will have to occur.
The $6.6 million in general funds and $2.2 million in
permanent fund corporation receipts for Dept. of Law legal
proceedings relating to oil and gas revenues would bring FY
93 funding up to a total of $18.4 million compared to the
$26.5 million spent in FY 92. Senator Rieger inquired
concerning what constituted need for the $18 million. Ms.
Frasca said she would ask that the Dept. of Law put as much
information regarding the legislation as possible in
writing. If additional information is then needed, perhaps
it could be provided to members in executive session.
Senator Rieger noted need for extra attention to the
request. Senator Kelly requested a list of attorneys on
contract as well as amounts they are being paid. Ms. Frasca
directed attention to a three-page memorandum from the
Attorney General detailing cases involved in the request.
Senator Kerttula spoke to expertise hired by oil companies
to dispute tax claims.
In response to a question from Co-chair Frank, Ms. Frasca
advised that $10.4 million for oil and gas litigation was
included in the FY 94 budget. Senator Kerttula noted that
the House substantially reduced funding for oil and gas
litigation last year. The Senate added back funding, but
the conference committee did not provide total funding. A
shortfall was thus predictable.
Ms. Frasca acknowledged that the Dept. of Law generally
indicates what total needs are likely to be. That is not
necessarily the amount that is proposed in the Governor's
budget.
The $280,000 to the Dept. of Law for outside counsel in the
telecommunications joint proceeding before the Federal
Communications Commission and the Alaska Public Utilities
Commission reflects ongoing litigation. The case will
determine how long distance rates are apportioned between
carriers outside of Alaska. That decision will ultimately
influence rates within the state. John Katz is the lead
person on the effort.
The $35,000 supplemental relating to subsistence law, passed
during the most recent special session, stems from the fact
that when the legislation was passed, there was no
opportunity to enact fiscal notes since the operating budget
had been completed in the regular session. Costs associated
with implementing the legislation were incurred by both the
Dept. of Law and Dept. of Fish and Game. Senator Kerttula
noted that recently passed law merely redefined some areas,
it did not mandate a "whole new approach to subsistence."
Co-chair Frank concurred.
The $1,087,700 in judgments and claims against the state
reflects a $1 million payment to plaintiffs in the
reapportionment lawsuit. Some of that payment is on appeal
to the Supreme Court. There is also potential that an
additional $300,000 will have to be paid. In response to a
question from Co-chair Frank, Ms. Frasca said she would ask
the department for a breakdown of the $1 million.
Directing attention to backup for the remaining $87,700,
Senator Rieger inquired regarding the difference between
costs and fees. Ms. Frasca said she would provide the
information. Senator Rieger asked for a breakdown of
instances in which the state pays attorney fees for
plaintiffs even though the plaintiffs lose the case.
Senator Sharp suggested that court awards should be budgeted
within the court system budget. He then noted that the
$87,000 relates to cases that have already been settled. He
then questioned the advisability of appropriating the
requested $1 million while the award is on appeal.
The $325,000 to the Dept. of Revenue for additional auditors
in the income and excise tax division relates to disputed
tax cases. Additional funding has been included within the
FY 94 budget. The Governor will also submit a budget
amendment for this item. Requested supplemental funding
will jump start this intensive effort.
ROD MOURANT, Assistant Commissioner, Dept. of Revenue, came
before committee in response to a question from Co-chair
Frank. He explained that the department had not spent the
requested supplemental. It has made preliminary contact
with the division of personnel to determine the status of
registers and applications on file for individuals who might
qualify for the four vacant positions. The department has
also commenced informal inquiry in the private sector for
availability of consultants to assist with research. Mr.
Mourant reiterated that no funds have been committed.
Speaking to the $6,427,100 for the Dept. of Education for
increased K-12 enrollment under the public school foundation
program, Ms. Frasca acknowledged that the amount could
change based on February reports from school districts.
Discussion between Senator Kelly and Ms. Frasca indicated
that payment is based on unaudited figures furnished to the
department by school districts. Senator Kelly questioned
the validity of the numbers. Ms. Frasca said she would
contact the department regarding its method of verifying
district figures. She then explained that most of the
change contained within the February count is the result of
reclassifying students. Districts may have already counted
them in one category and later realized that they belong in
special education programs. These districts are then
entitled to additional funding because of the special
education classification.
The $98,462 for the postsecondary education commission, WAMI
medical program represents an instance where the department
incorrectly billed an August payment for the program to the
FY 93 appropriation rather than FY 92. Funding for FY 92
thus lapsed into the general fund. As a result of the
billing error, the program is short for FY 93.
Speaking to Sec. 16, Ms. Frasca explained that it pertains
to ratification and amendment of prior-year expenditures.
These items arose as a result of a statewide audit conducted
by legislative audit. The audit identified instances where
bills were paid, but errors were made. Some errors result
from miscoding of the account number or small numeral
differences. Inclusion within the supplemental gets these
items off the books. No new moneys will be spent to effect
these corrections.
End, SFC-93, #27, Sid 2
Begin, SFC-93, #29, Side 1
GARY BADER, Director, Administrative Services, Dept. of
Education, came before committee to explain the need for
prior-year expenditures relating to education. He advised
that appropriations for which ratification is sought are
generally eight years old. Inability to correct accounting
problems stems from conversion of the old program budget
accounting system to the new system. In cases where a
charge was credited to the wrong account code, funds in the
correct account lapsed. The negative balance in the
incorrect account was then carried forward. The requests
contained within Sec. 16 represent an effort to clean up
department books.
Directing attention to Sec. 17, Ms. Frasca explained that
the $8,407,000 request for cost-of-living adjustments for
aid to families with dependent children results from an
unanticipated caseload increase. Legislation from last year
that would have suspended COLA failed to pass, but the funds
were not reinstated. Co-chairman Frank requested a
breakdown of the difference. He then asked how the
foregoing would dovetail with the department proposal to "do
a ratable reduction." Ms. Frasca answered, "That's not
reflected here, but we also are proposing to suspend the
COLA."
The $1,671,100 in Sec. 18 for adult public assistance
represents caseload increases, 3% cost of living allowance,
and changes to interim assistance. Ms. Frasca advised that,
as with AFDC, needed legislation did not pass last year.
The breakdown is $434.0 for interim assistance, $535.0 for
COLA, and $700.0 for caseload increases.
Amendments contained within Sec. 19 relate to MEDICAID
facilities. In this instance, the rate of growth was less
than what was budgeted. The department is thus able to make
reductions. Co-chairman Frank voiced his understanding that
funding for MEDICAID was increased in the FY 94 budget. Ms.
Frasca concurred. She explained that actual numbers on the
rate of growth are not available until February each year.
The administration did not have the benefit of those figures
when it prepared its FY 94 budget in December. She said she
would check with the department concerning possible
decreases in the upcoming budget.
The $265,300 requested in Sec. 20 relates to public
assistance eligibility determination workers. This need is
also caseload driven. The intent is to keep the error rate
down so the state is not fined by the federal government.
OMB authorized the department to proceed in filling eight
positions to keep up with the caseload. Last year, the
legislature approved thirteen new positions. However,
because of the unallocated reduction taken at the end of the
session, the department was unable to fill them. When an
increasing error rate became apparent, OMB authorized the
filling of eight positions. The department must also pay
increased contractual costs for fee agents who "do this work
out in rural Alaska as well as food stamp contracts and
other related costs due to increased caseloads."
The $390,000 set forth in Sec. 21 relates to the JOBS
program. It is also caseload driven and provides child care
services and other support services to welfare recipients
engaged in education, training, or other employment
activity. Co-chairman Frank voiced his understanding that
only 11% of welfare recipients are eligible to participate
in the program and that it is limited by the level of
appropriation.
JAN HANSEN, Director, Division of Public Assistance, Dept.
of Health & Social Services, came before committee. She
concurred that only 15% of welfare recipients are served by
the JOBS program. Per federal requirement, the department
must serve that percentage. The request in Sec. 21 is for
associated child care services. A higher percentage of
clients than expected require day care. The department
anticipated a 36% increase. The actual increase was 66%.
This piece of the program is not part of the federal cap.
The child care portion is considered federal entitlement.
It is a 50/50 uncapped match. Co-chairman Frank asked that
Ms. Hansen submit the foregoing explanation in writing.
The $348,00 in Sec. 22 pertains to increased data processing
costs for increased public assistance claims. Senator
Rieger subsequently asked if similar Dept. of Administration
data processing charges were impacting all agencies. Cheryl
Frasca said that the public assistance claim is the only
supplemental request for a data processing charge back.
JANET CLARKE, Director, Administrative Services, Dept. of
Health & Social Services, advised that the above request
could be unique in that the department had only recently
been able to claim federal funds in its charge-back
methodology.
The Sec. 23 request for $750,000 for medical assistance
claims processing results from an increased number of pre-
admission screenings. Last session a savings was achieved
by changing the standard length of in-patient stay routinely
reimbursed by MEDICAID. In the past, the length of stay was
re-reviewed "after the seventy-fifth percentile."
JANET CLARKE, Director, Administrative Services, Dept. of
Health & Social Services, again came before committee. She
explained that last year a reduction was made in the
MEDICAID formula portion of the department budget. Rather
than reviewing a ten-day hospital stay on the seventh day,
the department now conducts that review on the fifth day.
While that saved on the medical formula side of the budget,
it increased costs in claims processing. In response to a
question from Co-chairman Frank, Ms. Clarke agreed to
furnish information on formula savings.
The $1,100,000 in increased costs for foster care is also
caseload driven and depends upon the number of children
placed in foster care. The Sec. 24 request includes $700.0
the department hoped to recover through SSI billings. The
department plans to have a contractor complete application
for foster care children. The project got off to a later
start than anticipated. The department hopes to eventually
replace these moneys with federal dollars.
In response to a question from Co-chairman Frank concerning
why the project was delayed, JANET CLARKE explained that
national contract agencies provide a service listing
children in state custody and arranging for the state to
receive Social Security on their behalf. The department
anticipated a sole-source contract with a firm in Oregon
that provides similar services for that state. The Dept. of
Administration, however, required a competitive bid. That
delayed the process. Most of the process is now compete,
and it appears that the department will be using the same
contractor it would have had the sole-source arrangement
proceeded.
Senator Sharp inquired regarding disposition of permanent
fund dividends for foster children. Ms. Clarke explained
that the dividends are held in trust accounts for underage
children. When they reach eighteen, they are entitled to
receive the moneys. There are also opportunities for the
children to access the funds while they are in state
custody. The state applies for the dividends on behalf of
custodial children. Senator Sharp next asked if the state
could utilize the parents' permanent fund dividends to help
cover the cost of custodial care. Ms. Clarke said that she
would research that issue.
The $110,000 in Sec. 25 for the McLaughlin Youth Center
results from increased contractual costs associated with
facility expansion into a 20-bed treatment cottage and
remodel of the detention unit. Janet Clarke explained that
the new cottage replaces an older facility. It is not a new
activity. The department did not anticipate it would cost
additional moneys to open the new cottage. There were,
however, increases. There were also utility increases for
the entire institution. Co-chairman Frank requested a
breakdown of increased costs.
The Sec. 26 request of $229,600 for post mortem examinations
results from an 11% increase in the number of court-ordered
autopsies as opposed to the planned 15% reduction. In
response to a question from Co-chairman Frank, Ms. Clarke
explained that the FY 94 budget calls for an additional
reduction. The department's original plan was to transfer
this function back to the court system. The court system
finds that unacceptable. The department has thus been
working with the courts to develop an alternative. The
Governor's Office will submit a budget amendment for the
program. In conjunction with Health and Social Services,
Dept. of Public Safety, Dept. of Law, and the Court System,
the administration proposes establishment of a medical
examiner system to control costs in the future. The effort
has historically been underfunded by the legislature. A
supplemental has thus been requested over the past six or
seven years. The program could potentially expand to cost
"over a million dollars in the future." The medical
examiner model should contain and reduce costs.
Discussion followed between Ms. Clarke and Co-chairman Frank
regarding circumstances in which autopsies are now required.
Ms. Clarke explained that over 500 post mortem exams are
performed each year. By statute, the Dept. of Health &
Social Services must pay the bill while the court system
controls the number of court-ordered autopsies. The program
was moved to the Dept. of Health & Social Services in
1986/87 because of problems in administering the program
within the court system. Autopsies are performed through a
contractual arrangement with a pathologist.
Further discussion followed between Senator Rieger and Ms.
Clarke concerning liability associated with decisions made
by the state coroner.
Senator Sharp voiced his belief that "the cost causer ought
to be the cost payer." The agency ordering the autopsies
should also budget for them.
The Sec. 27 request for $155,900 for implementation and
citations relating to the bloodborne pathogen program
includes $31,500 for a noncompliance citation issued by the
Dept. of Labor. Janet Clarke voiced her understanding that
the Dept. of Labor also cited the Dept. of Corrections for a
similar violation. Federal regulations require that state
departments do a number of things to protect employees who
may come into contact with clients who may have bloodborne
illnesses. There must be a site-specific exposure control
plan, employees must receive three-part hepatitis B
immunizations, and employees are to receive special
training. The department has over 1,000 employees at risk.
The foregoing request will cover the fine (in the event the
department is unable to come to an understanding with the
Dept. of Labor), provide for training, etc.
When questioned by Co-chairman Frank concerning whether or
not the costs could have been anticipated, Ms. Clarke noted
the division of public health feeling that federal
requirements reflect "a little bit of a hysteria around
bloodborne diseases." The division questioned whether there
really was a public health risk. Experts in epidemiology
attempted to work with the federal government on the
regulations. Despite those efforts, the regulations were
implemented, and the state is now at risk. Both employees
and union representatives are concerned. The state must
comply with regulations enacted in July of 1992.
In response to questions from Senator Rieger, Ms. Clarke
said that there is a chance the $31,000 fine could be
"applied to our program, if our plan is acceptable to the
Dept. of Labor."
The $196,300 appropriation contained in Sec. 28 would
provide the Alaska Seafood Marketing Institute matching
dollars for federal funds for oversees marketing.
Sec. 29 is linked to the Sec. 28 appropriation in that it
extends the lapse date on the 1992 appropriation to the
Alaska Seafood Marketing Institute. Cheryl Frasca noted
validated encumbrances that may be liquidated based on
actual billings for advertising. That would potentially fee
$60,000 for application to the Sec. 28 match.
In response to a question from Co-chairman Frank asking why
ASMI did not reduce general fund expenditures to capture the
federal funds rather than seek a supplemental from the
legislature, Miss Frasca explained that the request garnered
approval by the administration because the Governor felt it
represented "a good opportunity to take advantage of these
federal dollars." It is difficult for ASMI to reallocate
existing dollars to meet anticipated needs.
(Co-chair Pearce arrived at the meeting at this time.)
The $90,000 request in Sec. 30 for the veterans' death
gratuity reflects the fact that more applications have been
received than the budget allows. The individual payment is
$750.00. Co-chairman Frank voiced his understanding that
the Dept. of Military and Veterans' Affairs proposes to
eliminate the gratuity in FY 94.
The $6,000,000 in Sec. 31 for fire suppression costs within
the Dept. of Natural Resources is intended to cover possible
spring fires and associated costs to the end of the fiscal
year. In response to a question from Senator Kelly, Miss
Frasca advised that approximately $3.6 of the $6 million
relates to fixed costs associated with fires. Last year the
legislature reduced the fixed cost request to $1.9. The FY
94 budget requests $4 million. Co-chairman Frank voiced
need to focus on this funding at a later time.
The Sec. 32 request for $641,000 relates to the land
selection process within the Dept. of Natural Resources.
The Governor made land selection a high priority in order to
present state selections to the federal government before
the end of the year. As a result of moving staff into this
project, the department has withdrawn them from other work.
Other appropriations could thus not be billed for the cost
of these employees, and the land selection project is short
in ability to cover its costs. Responding to a question
from Co-chairman Frank concerning savings in other areas,
Miss Frasca explained that projects from which staff was
withdrawn will eventually proceed. She said she would
obtain additional information on the issue.
Senator Rieger raised a question regarding the cost of
additional space requirements. NICO BUS, Chief, Financial
Operations, Dept. of Natural Resources, came before
committee. He explained that in order to expedite land
selection, the department had to "put on" more than 30
employees. The department rented an additional 3,000 square
feet of space in the Frontier Building in Anchorage. The
cost was $3 per square foot. Once the project is completed,
the lease will be cancelled.
In response to a question from Senator Kelly concerning the
year-end deadline for the project, Mr. Bus explained that
although selection was made, title has not yet been
transferred. A capital project for FY 94 is scheduled for
work with the federal government and native corporations
regarding actual transfer. The December deadline was to
"lock in the commitment from the federal government." If
that had not occurred, the federal government could have
designated selections. Mr. Bus estimated that the project
would conclude within the next two years, at which time
ongoing work would become a regular operating budget item.
Answering an additional inquiry by Senator Rieger relating
to lease costs in Anchorage, Mr. Bus noted that competition
has brought costs down somewhat. He subsequently
acknowledged that core DNR space "is one of the most
expensive leases . . . ." The Dept. of Administration
negotiated the most recent lease.
Sec. 33 contains a change in the scope of a 1989 capital
project for the Challenge Alaska Handicapped Ski School.
Miss Frasca acknowledged administrative discretion for
changes in scope. However, since the effort was originally
a legislative project, the administration elected to include
it within the supplemental. The change would expand the
scope beyond the original purpose of relocating an existing
facility and allow for design, engineering, and construction
associated with building a new school.
Sec. 34 costs of $492,000 relate to Dept. of Fish and Game
implementation of the 1992 subsistence law enacted as a
result of the most recent special session. The legislation
contained no fiscal note since budget funding for new
legislation had been done during the regular legislative
session.
End, SFC-29, Side 1
Begin, SFC-29, Side 2
Concerns were raised by members regarding actual need for
subsistence funding. Cheryl Frasca said she would provide
additional budget information.
Co-chairman Frank advised that additional review of SB 100
supplemental requests would continue at the next committee
meeting. He then directed that the meeting be briefly
recessed.
RECESS - 10:35 A.M.
RECONVENE - 10:50 A.M.
SENATE BILL NO. 46
Act authorizing moose farming.
Upon reconvening the meeting, Co-chairman Frank directed
that SB 46 be brought on for discussion.
TERESA SAGER-STANCLIFF, aide to Senator Mike Miller, came
before committee. She explained that the bill would give
the Dept. of Fish and Game authority to dispose of surplus
moose by transferring them to private ownership--either to
individuals or groups for commercial, scientific, or
educational purposes. The legislation would also legalize
the sale of moose meat.
DAVE KELLYHOUSE, Director, Division of Wildlife
Conservation, Dept. of Fish and Game, next came before
committee, voicing department opposition to the bill. He
explained that, based upon experience in all jurisdictions
previously providing for moose farming, the legislation will
not likely result in significant contributions to Alaska's
economy. Further, it is likely to require significant state
subsidies for moose farming ventures without prospects of
compensating revenues. Moose farming is also likely to
adversely impact Alaska's wild game populations as well as
businesses presently benefitting from state wildlife.
After over fifty years of experience, moose have not proven
to be a viable game farm species for either meat, draft
animal purposes, or milk production. Of two farming
operations in the former Soviet Union, one has closed and
the other has been converted to a wildlife research station.
Those operations found that moose were subject to behavioral
stress and related illnesses in high density situations.
They were unsuitable for draft purposes because they cannot
rid themselves of body heat. Milk production was low, and
feeding proved to be exceedingly expensive. The type of
fencing required to contain a moose costs approximately
$13,000 per mile. It would thus cost approximately $52,000
to fence a square mile of moose habitat. Without adequate
natural browse, moose must be provided supplemental hand-cut
browse or a special ration that costs twice as much as
domestic animal feed.
Moose do not do well in high stocking rates. Contrary to
other testimony, they are not herd animals. They are
solitary most of the time and group only during certain
times of the year. Large acreages of land are needed to
accommodate them.
As with other agricultural endeavors, an expensive state
subsidy is likely to be necessary for single-use dedication
of land, fencing, etc.
The department believes that, in terms of land use, active
management of wild moose populations has proven capable of
producing equal or more productivity per dollar than private
ownership.
Mr. Kellyhouse questioned assertions that moose farming
would provide viewing opportunities for tourists.
Department experience since statehood indicates that
roadside zoos result "in a high number of complaints."
While the department would likely have little jurisdiction
over private ownership, it would nonetheless be expected to
do something when complaints arise. The department's zero
fiscal note assumes that the only department involvement
would be to "find a surplus in coordination with the board
of game and then inspect facilities to see if they're
adequate." In reality, the department would probably
experience far more involvement. As an example, Mr.
Kellyhouse noted that the department has little authority
over the Delta bison herd. However, when captive bison
escaped, the department devoted two man-months to "trying to
get those animals back." The effort was unsuccessful since
the domesticated bison blended with the wild herd. There
would be more of a problem with moose.
A further concern relates to the "very real potential for
disease transmission and introduction to the wild." Most
game farms tend to have a variety of stock in close
proximity. Moose are extremely difficult to contain.
During rut males from outside the enclosure are likely to
attempt to gain access. The reverse is true for confined
males. Escapes are highly likely as is transmission of
disease.
ALICIA D. PORTER, Alaska Environmental Lobby, next came
before committee, voicing lobby opposition to the bill. She
said the legislation is considered biologically and fiscally
detrimental to the state. History has shown that game farms
are labor intensive and economically draining. Hidden costs
relate to:
1. Identifiable costs to the Dept. of Environmental
Conservation, including:
A. Examination of animals for disease
B. Inspection of meat for human consumption
C. Preparation of regulations
2. Vulnerability of the Dept. of Public Safety to
increased enforcement costs resulting from
legalization
of the sale of moose meat. Poaching of wild
animals frequently becomes a problem in areas
where the sale of game meat is legalized. After
the Province of Alberta, Canada, legalized elk
farming and the sale of elk meat, enforcement
costs skyrocketed due to increased poaching.
3. Dept. of Natural Resources need to permit land as
agricultural.
4. Dept. of Fish and Game need for:
A. Issuance of moose farm permits
B. Inspection of fencing and other facilities
C. Surplus determinations
D. Response to complaints from constituents and
tourists when facilities appear to be
substandard
E. Predator control
Ms. Porter noted that many agricultural projects in Alaska
have failed to meet economic expectations and have turned to
the state for subsidized, low-interest loans. The proposed
bill is accompanied by a zero fiscal note. The Alaska
Environmental Lobby believes that fiscal notes should be
requested from DEC, DNR, DPS and DF&G. Ms. Porter voiced
her belief that SB 46 would be a costly venture for the
state to fund.
OPAL WELTON next came before committee in support of the
legislation. She presented written testimony on behalf of
herself and her husband, Doug. (A copy of that testimony is
appended to these minutes and is also on file in the
original Senate Finance bill file for SB 46.)
DOUG WELTON next came before committee in support of the
bill. He explained that he and his wife, Opal, have been
working on moose farming legislation for over five years.
He took exception to Dept. of Fish and Game opposition and
said that moose farming represents a conservation effort.
Referring to Article VIII of the Natural Resource section of
the state Constitution, Mr. Welton read the following:
It is the policy of the state to encourage the
settlement of its lands and the development of its
resources by making them available for maximum use
consistent with the public interest.
The response to attempts to educate the public concerning
moose farming has been overwhelming support for the
proposal.
Mr. Welton further noted constitutional language calling for
legislative provision for utilization, development, and
conservation of all natural resources, including land and
waters. The key word is "conservation." He voiced his
belief that moose farming would provide a means of
counteracting the hunting and killing of moose.
Further constitutional provisions relate to reservation of
fish, wildlife and waters in the natural state to the people
of Alaska for common use. Residents of the state are to
benefit from Alaskan wildlife, not merely employees of the
Dept. of Fish and Game and those who come to Alaska from
other countries and states to hunt and fish.
Mr. Welton noted that orphaned animals are often sent
outside the state to zoos elsewhere. He suggested that
Alaskans should have a prior claim on this wildlife, and he
took exception to references to proposed moose farm efforts
as "roadside zoos." He made reference to the reindeer
facility at the University of Alaska and musk ox and
reindeer facility at Palmer and noted that neither could be
so classified.
Mr. Welton again pointed to constitutional language and
advised of the requirement that fish, forest, wildlife,
grasslands, and all replenishable resources belonging to the
state be utilized, developed, and maintained on the
sustained yield principle, subject to preferences among
beneficial uses. There are beneficial uses for moose aside
from hunting. It could provide a healthier, leaner red meat
than the beef on the market today.
Constitutional language further states that the legislature
may provide for facilities, improvements, and services to
assure greater utilization, development, reclamation, and
settlement of lands and to assure full utilization and
development of fisheries, wildlife, and waters. Mr. Welton
again stressed that full utilization should allow for more
than merely hunting. Moose farming would not have to
escalate into large commercial operations. Small rural
farms would provide families with fresh milk and breeding
stock for an ongoing meat supply. The legislature is
obligated to provide Alaskans with these opportunities.
JOHN CRAMER, Director, Division of Agriculture, Dept. of
Natural Resources, came before committee. He voiced
department support for the legislation, but noted his
personal belief that a large-scale commercial operation for
meat production would probably not be economically feasible.
Noting Dept. of Fish and Game opposition, Mr. Cramer said he
was unaware of the basis for concerns regarding a potential
"significant state subsidy."
Speaking to the likelihood of disease transmission, Mr.
Cramer suggested that it should be addressed by the state
veterinary rather than the Dept. of Fish and Game. He then
suggested that the committee consult with the veterinary in
the course of further discussion of the bill.
Mr. Cramer further advised that lands already identified as
agricultural lands could be utilized for moose farm
operations. Farming efforts would not necessarily remove
lands from other uses and set them aside as additional
agricultural lands.
Addressing comments by the Alaska Environmental Lobby that
agriculture has failed, economically, in Alaska, Mr. Cramer
said, "There are successes in every segment of agricultural
industry in the state of Alaska, including game farming."
The Dept. of Natural Resources and Dept. of Fish and Game
could work together on fencing requirements. Current game
farms are working. There have been no releases aside from
the Delta bison incident. Regulations can be written and
enforced in such a way that a significant hazard for wild
populations would not be posed.
Co-chairman Frank voiced his understanding that Senator
Miller is working with the administration to change
definitions within the bill. He then directed that the bill
be HELD in committee pending those changes.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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