Legislature(1993 - 1994)
01/31/1994 09:10 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
January 31, 1994
9:10 a.m.
TAPES
SFC-94, #10, Side 1 (000-end)
SFC-94, #10, Side 2 (000-end)
SFC-94, #12, Side 1 (000-444)
CALL TO ORDER
Co-chairman Steve Frank convened the meeting at
approximately 9:10 a.m.
PRESENT
In addition to Co-chairman Frank, Senator Kelly was present.
Co-chair Pearce and Senators Kerttula, Jacko, and Sharp
arrived soon after the meeting convened. Senator Rieger did
not attend.
ALSO ATTENDING: Senator Randy Phillips; Randy Welker,
Legislative Auditor; Shelby Stastny, Director, Office of
Management and Budget; Joe Swanson, Director, Division of
Elections, Office of the Lieutenant Governor; Mike Nizich,
Director, Division of Administrative Services, Office of the
Governor; Bruce Geraghty, Deputy Commissioner, Dept. of
Community and Regional Affairs; Remond Henderson, Director,
Division of Administrative Services, Dept. of Community and
Regional Affairs; Pam Stoops, Executive Director,
Legislative Affairs Agency; Mike Greany, Director,
Legislative Finance Division; Virginia Stonkus, fiscal
analyst, Legislative Finance Division; and aides to
committee members and other members of the legislature.
ALSO ATTENDING VIA TELECONFERENCE FROM ANCHORAGE: Edgar
Blatchford, Commissioner, Dept. of Community and Regional
Affairs; and Robert Harris, Director, Division of Energy,
Dept. of Community and Regional Affairs.
SUMMARY INFORMATION
SB 243 - FOUR DAM POOL TRANSFER FUND
Discussion was had with Randy Welker, Mike
Greany, and Bruce Geraghty. The bill was
subsequently HELD in committee for possible
amendment.
SB 247 - STATE LEASES & LEASE-PURCHASE FINANCING
No discussion. Need for technical amendment
was noted. The bill was HELD in committee
for action at the next meeting.
HB 370 - APPROP: FY 95 OPERATING AND LOAN BUDGET
FY 95 operating budget overviews were
presented by staff from the following
agencies:
Dept. of Community and Regional Affairs
Governor's Office
Legislature
HB 370 APPROP: FY 95 OPERATING AND LOAN BUDGET
BUDGET OVERVIEW - DEPT. OF COMMUNITY & REGIONAL AFFAIRS
EDGAR BLATCHFORD, Commissioner, Dept. of Community and
Regional Affairs, presented his opening comments via
teleconference from Anchorage. He then asked that
department staff in Juneau proceed with the overview.
BRUCE GERAGHTY, Deputy Commissioner, Dept. of Community and
Regional Affairs, directed attention to a handout (copy on
file in the committee minute book) identifying changes
within the department. Major operational changes result
from legislative action that brought rural programs from the
Alaska Energy Authority to the department. Major budget
decrements were derived from reductions in municipal
assistance and revenue sharing, senior citizens and disabled
veterans property tax exemption and renter rebate programs,
and non-funding of line-item designated grants.
Comments followed regarding the department position count
and impact of the Governor's hiring freeze. REMOND
HENDERSON, Director, Administrative Services, Dept. of
Community and Regional Affairs, said that only 3 positions
are presently frozen. Savings from the positions would
total $74.0 over a six-month period. Only $45.0 is general
fund.
Discussion followed concerning how the above-mentioned
decrements were derived. Mr. Geraghty explained that
initial instructions to the department were for a status quo
budget. That budget was presented to the Office of
Management and budget last fall. Due to declining revenues
and further discussions, the department "came up with the
additional reductions." Co-chair Frank voiced his
understanding that the department made no internal cuts in
costs such as travel or other areas prior to proposing the
50% cut in municipal assistance, total elimination of
designated grants, etc. Mr. Geraghty said that the
department budget had been reduced over past years to a
point where further reduction would mean elimination of
programs. Discussion followed regarding lack of elimination
of administrative costs associated with designated grants
and other decrements. Mr. Geraghty said that if proposed
reductions are enacted by the legislature "There may be
minor savings in personal services lines."
Senator Kerttula noted that reduction of municipal
assistance and revenue sharing at the state level merely
increases taxes at the local level. He then voiced his
displeasure over reductions in the senior citizen and
disabled veteran property tax exemption and renter rebate.
In response to a request from Senator Phillips, Mr. Geraghty
advised of the following revenue sharing and municipal
assistance funding for FY 92 through 94:
Revenue Sharing Municipal
Assistance
FY 92 $38,347.0 $46,648.0
FY 93 35,279.2 42,916.2
FY 94 32,809.7 39,912.1
Senator Phillips raised questions regarding the rationale
and the advocates behind the proposed 50% reduction in the
upcoming budget. Mr. Geraghty said that discussion of
reductions originated at the economic summit in November,
1992. Virtually all groups at the summit recommended that
revenue sharing and municipal assistance be eliminated. The
department thus moved in that direction. Senator Phillips
concurred in concerns expressed by Senator Kerttula and
suggested that other areas should be reduced prior to the
proposed cut.
Senator Kerttula provided historical background on municipal
assistance. Mr. Henderson noted that 70% of department
funds involve municipal assistance, revenue sharing, and
senior programs. There are thus not many other areas in
which to effect a $40 million reduction. Elimination of all
administrative and technical personnel would yield only $8
million in general fund savings.
Discussion next reverted to discussion of the new Division
of Energy. ROBERT HARRIS, Director of the division, spoke
via teleconference from Anchorage. He explained that he
assumed his position the middle of November when transfer of
rural energy programs from the Alaska Power Authority to the
new Division of Energy within the Dept. of Community and
Regional Affairs was underway. The purpose of the Division
of Energy, created by the legislature in 1993, is to assist
in development of safe, reliable, energy efficient systems
throughout Alaska. Mr. Harris highlighted the following
efforts:
Rural operational technical and emergency assistance
program.
Bulk Fuel
Circuit Rider Program
Alternate and Applied Energy
Rural Power Systems Upgrade
Compilation of Alaska Electric Power Statistics
Waste Heat Projects
Speaking to system upgrades, Mr. Harris advised of 19
projects for FY 94, totaling $2 million. Priority is given
to communities willing to contribute 25% of the cost of the
project. The division seeks to avoid continued operation
and maintenance costs for the projects.
Mr. Harris next noted that the division is developing a
feasibility study for the Copper Valley Intertie between
Sutton and Glennallen. It is also actively pursuing rural
utility consolidation and regionalization as well as
assisting rural utilities with business management
requirements. Approximately 80 rural utilities have fewer
than 200 customers. The power cost equalization project is
presently funded at approximately $17.5 million annually.
Mr. Harris next explained that the division administers
loans from the power project fund (the four dam pool
transfer fund). It also administers power cost equalization
and the rural electrification capitalization fund (also from
the four dam pool transfer fund). Loans have not been made
from the rural electric revolving loan fund for a number of
years, mostly because of the electric service extension
grant fund. Most utilities would rather receive a grant
than borrow money. The bulk fuel revolving loan fund allows
communities with good financial histories to borrow up to
$100.0 and pay it back over a nine-month period. This
program has been extremely successful. Last year over 50
communities were involved, and that number is expected to
increase to 60 or 65.
The division of energy is now consolidated with the Dept. of
Community and Regional Affairs. The division has been
working on strategic energy plans, internal work plans, and
the transition as it relates to AIDEA. Mr. Harris said he
had also spent considerable time meeting with constituents
in rural Alaska. He stressed need for on-site knowledge of
utility systems.
In response to a question from Senator Jacko concerning the
number of energy authority positions before and after
consolidation, Mr. Harris said the division has roughly
half. The division of energy has the bulk of the staff
transferred from the former energy authority. Some
administrative positions have been placed under the division
of administrative services, three or four positions
associated with specific projects such as Bradley Lake moved
to AIDEA, and positions associated with operation of
specific hydroelectric projects (Bradley Lake was again
cited) have been picked up by utility companies (Homer
Electric was noted).
Senator Jacko new inquired concerning staff for the circuit
rider program. Mr. Harris said that three positions from
rural construction maintenance were eliminated. Contracts
were then entered with Kotzebue Electric, Alaska Power and
Telephone, and Alaska Power Systems. The function remains
and more individuals, statewide, are now involved in the
program than before.
Lengthy Discussion followed regarding the twelve positions
transferred to administrative services from the thirty-two
administrative positions in the Alaska Energy Authority.
Bruce Geraghty attested to concerns relating to technical
expertise within the division of energy and ability to
provide the same level of service to which utilities in
small communities are accustomed. Identified procedural
process problems have consumed a good amount of the new
director's time. The transfer resulted in a reduction from
the nearly 80 positions in the Alaska Energy Authority "down
to just over 40."
Senator Sharp raised a question concerning the $525.0
general fund increment and administrative costs of power
cost equalization and other projects. Remond Henderson
explained that, in past years, operational funding came from
a combination of sources.
End, SFC-94, #16, Side 1
Begin, SFC-94, #16, Side 2
This year the operating budget is based on operational
funding from general funds. The $3.9 million appropriated
for FY 94 was used as a base. Funds for operations will not
be deducted from the revenue flow prior to distribution to
various programs. Approximately $4 million in general funds
is requested for operations. Further discussion followed
between Senator Sharp and Mr. Henderson regarding past use
of CIP moneys for operational funding. Co-chair Frank
raised both budgetary and policy concerns regarding proposed
use of general funds for operations.
Senator Sharp voiced his recollection that power cost
equalization was capped at $18 million. The proposed
budget, however, seeks $18.6 million.
Co-chair Frank called for additional questions or comments
regarding the proposed budget for the Dept. of Community and
Regional Affairs. None were forthcoming.
SB 243 FOUR DAM POOL TRANSFER FUND
Co-chair Frank directed that SB 243 be brought on for
discussion.
MIKE GREANY, Director, Legislative Finance Division, came
before committee. He explained that SB 243, sponsored by
the Legislative Budget and Audit Committee, contains
specific, remedial legislation to respond to a concern that
arose in November. One of the elements of energy
legislation passed last year abolished the power development
revolving loan fund and moved the money to a newly created
four-dam-pool transfer fund. The intent was that money from
the transfer fund would flow to three receiving funds:
1. Power cost equalization
2. Southeast energy fund
3. Statewide power projects
Additional legislation contained a capital appropriation
from the Southeast energy fund for a specific intertie. The
substantive legislation spoke to flow of money from the
four-dam-pool transfer fund to the three receiving funds,
"subject to appropriation." No appropriation was
subsequently made to get the moneys to the three receiving
funds. Legislative Budget and Audit then introduced
legislation that deleted "subject to appropriation" language
so that the money would automatically flow through a
transfer process from the four-dam-pool transfer fund to the
receiving funds.
Mr. Greany next spoke to the funding of administrative costs
from transfer fund moneys. He explained that moneys from
the former power development revolving loan fund paid for
certain administrative costs in the past. Current
legislation does not provide for that. If the desire is to
fund a portion of the administrative costs from the four-
dam-pool transfer fund or the three receiving funds,
legislation so specifying would be needed. Mr. Greany noted
an open question, concerning the legislature's power of
appropriation, absent specific statutory authority. The
clearest approach would be through statute designating how
administrative costs will be addressed.
RANDY WELKER, Legislative Auditor, added that SB 243 would
not preclude the legislature from appropriating operating
costs from the subject funds. Senator Sharp directed
attention to page 1, line 4, of the bill and noted language
allowing for appropriation of administrative costs prior to
effecting the 40/40/20 transfer. Mr. Welker concurred and
added that there is nothing that would preclude the
legislature from making appropriations "out of those
receiving funds either."
Co-chair Frank voiced a preference for specific language
clarifying that administrative costs are to flow from the
transfer or receiving funds rather than leaving that issue
to the budget process. He then requested that staff work on
a proposed amendment to the bill to accomplish that end.
Bruce Geraghty said the department views SB 243 as technical
in nature. He cautioned against narrowing the approach to
funding energy operations.
Co-chair Frank asked how the department would respond should
the legislature disallow general fund increases. Mr.
Geraghty noted that the Alaska Energy Authority budget for
FY 94 totaled $8.4 million. That has been reduced to $3.9.
The division is making an effort to return several million
dollars to the general fund. He next spoke to continuing
transfer of moneys and functions from the Dept. of Commerce
and Economic Development to Dept. of Community and Regional
Affairs.
Mr. Greany explained that the legislature has the ability to
appropriate at any of the steps along the way. It would be
clearer to specify at which point in the process
administrative costs should be addressed:
1. Before distribution to receiving funds.
2. As part of the receiving funds on a prorated
percentage.
Co-chair Frank advised that the issue would be further
considered and brought back for discussion at a later time.
He then directed that SB 243 be HELD in committee.
SB 247 STATE LEASES & LEASE-PURCHASE FINANCING
Co-chair Frank announced that SB 247 would be HELD in
committee pending preparation of technical amendments.
HB 370 APPROP: FY 95 OPERATING AND LOAN BUDGET
BUDGET OVERVIEW - OFFICE OF THE GOVERNOR
MIKE NIZICH, Director, Division of Administrative Services,
Office of the Governor, came before committee. He said that
the FY 95 budget for the Governor's Office totals $20,723.3
and is comprised of:
federal receipts $2.9 million
general fund match 1.5 million
general fund 16.0 million
general fund program receipts 4.9 thousand
interagency receipts 121.0 thousand
The foregoing represents a $2,544.5 increase over the FY 94
adjusted base ($423.9 in federal funding and $2,120.6 in
general funds).
Co-chair Frank noted that the overview from the Division of
Legislative Finance shows different numbers. Mr. Nizich
said he would look into the differences. He noted that
general fund increases relate predominantly to the Division
of Elections.
The position count for FY 95 is 174 full-time (an increase
of 3 permanent full-time positions). The request also
includes 4 permanent part-time and 48 temporary (an increase
of 29).
The budget includes three general fund increments totaling
$2,135.8 for the Division of Elections. The first consists
of $110.0 for a precinct map feasibility study. An RSA with
the Dept. of Labor is presently budgeted. The Office of the
Governor has since changed that request and will provide a
budget amendment indicating that other state agency or
private sector assistance will be sought for the study. The
project is intended to ensure greater efficiency in
reapportionment activities and provide district and precinct
maps to candidates.
The second incremental request relates to partially closed
primary costs. It totals $309.6 and reflects the cost of
the split ballot primary election.
A total of $1,716.2 is also requested for the on-year
election increment to operate primary and general elections.
An additional 29 temporary positions is also being
requested.
The Human Rights Commission requests federal receipt
authority for $33.9 thousand. The Commission receives EEOC
funding in support of efforts in resolving cases involving
employment and housing discrimination. Funding is based on
a flat fee of $500.00 for processing and resolving each
case. Mr. Nizich pointed to recent LBA approval of an RPL
which increased FY 94 funding by $42.0, bringing the total
to $90.0.
The Executive Office is requesting federal receipts of $25.0
for the client assistance program. This is the third year
the office has administered this program which was taken
over from the Dept. of Education. It is authorized under
Title I of the Rehabilitation Act of 1973 and is funded
through the U.S. Dept. of Education. The program was
authorized to receive $75.0 in FY 94. LBA recently approved
a request for an additional $25.0.
The EPA pollution prevention program is in its third and
final year. In 1991 the state was awarded $270.0 from the
U.S. Environmental Protection Agency for a three-year
program entitled, "Building Sustainable Communities in
Alaska." The state has been notified that an additional
$30.0 is available for this green star program. In response
to a question from Senator Kerttula, Mr. Nizich advised that
the program is conducted through agreements with entities in
various communities and assistance from the Dept. of
Environmental Conservation. Senator Kerttula inquired
regarding radiation leaks at Amchitka. Mr. Nizich said he
would check into the matter and report back.
Mr. Nizich next spoke to the success of the media support
center in both its printed efforts and video production.
The center anticipates receipt of an additional $121.0
through RSAs with various agencies. In response to Senator
Kerttula's concern regarding controls over the center, Mr.
Nizich said that the center works in conjunction with
departments to put out information to assist the general
public. The media center is not commingled with the
Governor's press office. Co-chair Frank noted that last
year the legislature reduced the request for the center to
$247.0. Mr. Nizich spoke to intent to utilize RSA funds
from video productions for media center support. Senator
Sharp asked if, in the past, agencies contracted with
private firms for media work. Mr. Nizich spoke to media
center hire of technical staff with video expertise. He
acknowledged occasional private sector contract for graphics
or animation. Use of video is relatively new for most state
agencies.
Co-chair Pearce requested a chart of staff at the Office of
Governmental Coordination and funding associated with each
position. Mr. Nizich agreed to provide the information. He
explained that positions remain as long as federal funding
is forthcoming. When it is discontinued, the positions are
eliminated.
Mr. Nizich advised that the Office of Governmental
Coordination anticipates receiving a $234.0 increase in the
coastal management program. That involves two positions,
one of which is federally funded, and the other is funded
from state match. The other federally funded position
relates to a request to receive $101.0 for non-point source
pollution control funds.
Mr. Nizich said that two, technical budget amendments are
anticipated. The first relates to a $15.2 transfer from the
executive office for leasing, and the other to the Division
of Elections for the geographic information system.
A supplemental funding request for FY 94 is not anticipated.
SHELBY STASTNY, Director, Office of Management and Budget,
came before committee in response to a question from Senator
Kerttula. Mr. Stastny said that conversion of short-term
contractual staff to full time occurred prior to his tenure.
Five, temporary, one-year positions for the efficiency
review team are gone.
End, SFC-94, #10, Side 2
Begin, SFC-94, #12, Side 1
BUDGET OVERVIEW - LEGISLATURE
MIKE GREANY, Director, Legislative Finance Division,
directed attention to a three-page handout (copy on file in
the committee minute book) and explained that it contains a
summary of FY 94 and 95 budgets. A second handout (copy of
file) contains a history and description of legislative
agencies.
Amounts set forth on the first handout reflect funds
appropriated by the conference committee for FY 94, plus
carry-forward amounts included in the reappropriation bill.
The FY 95 budget is at the same level as 94. Co-chair Frank
directed attention to the shortform for the legislature and
noted expenditure of $30,661.5 in FY 93. He then referenced
FY 94 and proposed FY 95 funding of $41,471.3 and noted that
in excess of $10 million over actual expenditure appears to
be budgeted. Excess funding is shown as the FY 93 carry-
forward. Senator Kerttula noted that portions of the
carry-forward might reflect an accumulation over a number of
years.
Mr. Greany next directed attention to transfer of funding
from Senate Finance to Council and Subcommittees for the
Ethics Committee as well as transfer within the Legislative
Council component to Public Services.
RANDY WELKER Legislative Auditor, came before committee to
speak to the budget for the Legislative Audit Division. He
referenced conference committee funding of $2,743.1 and said
that it is consistent with the maintenance level budget of
the past several years. Actual expenditure has ranged
between $2.5 and $2.6 million. That produced a cumulative
carry-forward of $221.3. Mr. Welker explained that the
carry-forward is not considered when the basic budget is
developed each year. The request for the coming fiscal year
supports the existing 36 positions. In response to a
question from Senator Kerttula, Mr. Welker attested to
sufficient work to keep 20 additional auditors busy. In
response to an additional question, he referenced a flex-
time policy reviewed, modified, and approved by the
Legislative Budget and Audit Committee.
Mr. Greany, Director, Legislative Finance Division, again
came before committee. He referenced three, major
components within the division:
1. House Finance Committee
2. Senate Finance Committee
3. The division administrative office
Co-chair Frank asked if House and Senate Finance Committees
are budgeted for the same amount. Mr. Greany attested to
past budgeting of like amounts. However, in most recent
conference committee action, a greater reduction was taken
to the Senate Finance Committee. In response to a request
from Co-chair Frank, Mr. Greany said that he would provide
the exact amount to committee.
Amounts shown for committee expenses reflect costs of the
Legislative Budget and Audit Committee, including staff to
the chairman, authorized travel for committee meetings, and
contractual work. Co-chair Frank noted that the committee
spent $144.0. The conference committee authorized $300.0.
With the reappropriated carry-forward, funding totaled
$767.0. Mr. Greany concurred in those numbers.
Senator Kelly raised questions concerning administrative
staff. Mr. Greany listed himself, six fiscal analysts, two
administrative positions, and two data processing positions.
Senator Kerttula raised questions regarding the substantial
turnover in the division and voiced concern that new staff,
experiencing a learning curve, might not be able to provide
the needed checks and balances between the legislature and
the administration. Mr. Greany responded that the division
enjoyed low turnover for a number of years. During the past
interim, five of the six analysts moved on to advanced
positions. Two moved from range 22 to range 26. A third
moved to range 23. A fourth made a lateral move to the
Office of Management and Budget, and the fifth took a cut in
pay to fill an administrative officer position in the Dept.
of Health and Social Services. Senator Kerttula suggested
that such a substantial turnover evidences management
problems. Senator Kelly noted that most of those leaving
the division took promotions. He further noted that word
was out that the legislature intended to cut the division,
and he suggested that that may have motivated turnover. The
problem may be political rather than managerial.
Co-chair Frank referenced information furnished by staff
indicating funding of House Finance at $1.5 million and
Senate Finance at $1.2 million.
PAM STOOPS, Executive Director, Legislative Affairs Agency,
next came before committee to speak to the ten components in
the agency budget. She explained that carry-forwards in
salaries and allowances would be utilized to fund the
increase in the annual allowance. The budget for executive
administration will not be presented to the Legislative
Council until February. FY 94 was the first year components
were allowed to retain their individual carry-forwards.
Past carry-forward funding was reappropriated to the
legislative operating budget. Carry-forward increases for
salary expenses and the legislative operating budget are due
to decreased staff positions in the House and Senate. The
FY 94 budget was maintenance level.
Ms. Stoops next provided the following component analysis:
Salaries and allowances funds salaries, per diem, and the
annual office allowance for the sixty legislators.
Executive administration funds data processing and the
office of the executive director, including data processing
chargeback for the entire legislature as well as the
Ombudsman.
Public services funds the 20 legislative information offices
throughout the state and long-distance teleconference costs.
Administrative services funds accounting personnel, summer
tour guides for the capitol building, and the print shop.
Legal services funds attorneys and support staff for bill
drafting, the legislative reference library, the code
revision commission, and uniform law commissioners.
Session expenses pays for operation of the 120-day session
and interim operation of the Chief Clerk's and the Senate
Secretary's offices. Approximately 212 positions are
budgeted in this component. In response to a question from
Co-chair Frank concerning funding for session and full-time
aides, Mrs. Stoops said that positions are budgeted under
session expenses for four months and under the legislative
operating budget or legislative finance or audit division
budgets for the remaining eight months.
Council and subcommittees funds the chair of the Legislative
Council, the Ethics Committee, Administrative Regulation
Review, and special committees and task forces. Senator
Kerttula noted that the Ethics Committee was supported by
Senate Finance rather than the Legislative Council.
General services funds legislative leases and salaries and
expenses of maintenance and supply staff.
The Legislative Research Agency provides research services
to both the House and Senate.
The Legislative Operating Budget component funds interim
operations, staff, travel, and contracts. It also contains
leadership accounts authorized at $8.4 million. The initial
appropriation provided $2.5 million each for House and
Senate leadership. The carry-forward on the Senate side was
considerably higher than the House. Mrs. Stoops said she
would provide actual figures.
No one was present to speak to the budget for the Ombudsman.
In response to questions from Senator Kelly, Mrs. Stoops
advised that the office does its own administrative work
with assistance from Legislative Affairs. One staff
position within the Ombudsman's office handles both
accounting and personnel functions.
Speaking to the overall Legislative Affairs Agency budget,
Senator Kerttula inquired concerning areas that might be
reduced. Mrs. Stoops said that the agency, with assistance
from the Division of Personnel within the Dept. of
Administration, would be conducting a salary review for all
positions to see how they compare with other exempt
positions in the executive branch. She acknowledged that
areas could be cut, but not without impact.
ADJOURNMENT
The meeting was adjourned at approximately 11:30 a.m.
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