Legislature(1995 - 1996)
05/09/1996 03:45 PM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
FIRST SPECIAL SESSION
May 9, 1996
3:45 p.m.
TAPES
SFC-96, FSS #1, Sides 1 and 2
SFC-96, FSS #2, Side 1 (000-426)
CALL TO ORDER
Senator Steve Frank, Co-chairman, convened the first meeting
of the Senate Finance Committee for the First Special
Session of the Nineteenth Legislature at approximately 3:45
p.m.
PRESENT
In addition to Co-chairmen Frank and Halford, Senators
Phillips, Rieger, Sharp, and Zharoff were present. Senator
Donley arrived soon after the meeting began.
ALSO ATTENDING: Senator Leman; Annalee McConnell, Director,
Office of Management and Budget; Jim Baldwin, Assistant
Attorney General, Governmental Affairs Section, Dept. of
Law; Nancy Slagle, Director, Division of Budget Review,
Office of Management and Budget; Janet Clarke, Director,
Division of Administrative Services, Dept. of Health and
Social Services; Dan Spencer, Budget Analyst, Office of
Management and Budget; Sam Kito, III, Legislative
Liaison/Special Assistant, Dept. of Transportation and
Public Facilities; Eric Swanson, Budget Analyst, Division of
Administrative Services, Dept. of Administration; Beverly
Reaume, Director, Division of Personnel, Dept. of
Administration; Bob Cole, Director, Division of
Administrative Services, Dept. of Corrections; Karen
Rehfeld, Director, Administrative Services, Dept. of
Education; Mike Greany, Director, Legislative Finance
Division; Fred Fisher, Virginia Stonkus, Kathryn Daughhetee,
Susan Taylor, and Dave Tonkovich, fiscal analysts,
Legislative Finance Division; and aides to committee members
and members of the legislature.
SUMMARY INFORMATION
FY 96/97 ALL FUNDS FISCAL SUMMARY
An updated fiscal summary of FY 96 authorized funding,
FY 97 Legislative expenditures to date, and a comparison
of FY 97 and FY 96 funding was presented by Mike
Greany.
SB 1005 - APPROP: MISCELLANEOUS
Section-by-section review of the bill was had with
representatives of various departments and staff from
the Office of Management and Budget.
Upon convening the meeting, Co-chairman Frank asked that the
Division of Legislative Finance advise members of "where we
are with the budget bills that the legislature passed" (HB
412, 413, and SB 136) during the regular session. Committee
review would then proceed to SB 1005, the Governor's new
appropriation request.
MIKE GREANY, Director, Legislative Finance Division, came
before committee accompanied by FRED FISHER, fiscal analyst.
Mr. Greany referenced a fiscal summary (copy on file in the
original Senate Finance Committee file for SB 1005) and
explained that it reflects all appropriations made during
the regular session. Total funding is set forth in four
appropriations:
SB 84 - Transfer of reserve account funds to the
corpus
of the permanent fund.
HB 412 - The state operating budget.
HB 413 - The operating budget for mental health
programs.
SB 136 - Capital, supplemental, and reappropriated
funding.
Funding shown as FY 96 authorized includes appropriations
enacted by law, plus the transfer made by SB 84 (Specials &
Fund Transfers). FY 97 legislative action to date is shown
in the next column by funding source and totals. A
comparison of FY 96 and 97 evidences a $73.6 million
decrease in general funds and constitutional budget reserve
fund expenditures for FY 97.
Co-chairman Frank next directed attention to a summary page
for SB 1005 and noted that it shows $52.1 million in total
funding ($30 million in general funds, $7 million in federal
moneys, $15 million other funds, and $6.9 million in
reappropriations). He then asked that representatives of
the administration provide an analysis of the 38 sections
within the bill. Senator Randy Phillips voiced his
understanding that the proposed bill contains a $30 million
general fund increase over legislation passed in the regular
session. Co-chairman Frank concurred.
NANCY SLAGLE, Director of Budget Review, Office of
Management and Budget, came before committee and provided
the following analysis:
Sec. 1. Contains legislative intent concerning the long-
range financial planning commission, cites past efforts of
the commission, and notes need for long-range financial
planning for the state. It identifies items the ten-year
plan should address. Mrs. Slagle pointed to intent to close
the fiscal gap by the end of 2001 and referenced tools to be
used to meet that goal. Senator Donley posed questions
concerning legislative support for the ten-year plan, the
drafting style used in setting forth intent language, and
the tools listed, particularly the proposed income tax.
Senator Rieger asked if findings and intent language within
Section 1 represents the Governor's plan. Mrs. Slagle
responded affirmatively.
Senator Rieger referenced language citing need to fully
inflation proof the principal of the permanent fund and
asked when the Governor changed course on the issue. Mrs.
Slagle voiced her belief that the Governor's original plan
fully inflation proofed the fund. The difference was the
source of inflation proofing moneys. Senator Rieger said
that the foregoing reflects a change of course from what the
Governor previously advocated.
Senator Phillips directed attention to Page 2, lines 20 and
21, and voiced concern regarding use of an income tax, other
taxes, reserves, and permanent fund earnings as tools to
accomplish budget goals. Mrs. Slagle noted that the
foregoing reflects discussion of the long-range financial
planning commission report. The Senator advised that
portions of the report speaking to use of reserves and
permanent fund earnings had been "resoundingly turned down"
by his constituents. He said he furnished the Governor's
office the results of a survey on that issue. Senator
Phillips subsequently requested an explanation of "other
taxes."
Senator Donley directed attention to Page 2, line 29, and
asked how the Governor intended to accomplish the proposed
$100 million reduction in fiscal years 1997-99. He took
exception to the administration's approach of showing
increased user fees as a cut in spending. He suggested that
language within subsection (9) at the bottom of Page 2 was
deceptive. Co-chairman Frank agreed that new fees should be
shown as increased revenues.
Senator Rieger directed attention to Page 3, line 21,
subsection (21) and noted the goal of managing the reserve
to achieve "at least a 6.5 percent return in fiscal year
1997." He said the Senate Finance Committee considered
management changes intended to achieve a goal of
approximately 8 percent by commingling reserves with
permanent fund investments. He then asked how that proposal
would fit within the Governor's plan. Nancy Slagle voiced
her understanding that the Dept. of Revenue has reviewed
management methods intended to increase return. She said
she was unsure, at this time, what the anticipated return
might be. The 6.5 percent is higher than the current
return. That amount was thus used as the threshold.
Co-chairman Frank referenced Page 2, lines 23 and 24,
subsection (22) which cites need to fix the reserve's sweep
and payback provisions through constitutional amendment, and
he inquired concerning whether the Governor would support
passage of Senator Rieger's legislation, or other
legislation, to accomplish that goal. Nancy Slagle voiced
support for "taking care of those provisions." In response
to a question from the Co-chairman, Senator Rieger advised
that his bill would not eliminate the three-quarter vote.
It would eliminate the sweep and pay back. If the budget
reserve fund is used for the purpose of increasing spending
from year to year, the three-quarter vote requirement
remains.
Senator Donley referenced subsection (18) on Page 3 and
voiced disagreement with a dedicated fuel tax. The public
policy behind dedicated taxes deserves considerable debate.
Co-chairman Frank concurred.
Co-chairman Halford questioned the advisability of
submission of legislation proposing a ten-year plan based on
constitutional amendments that might not be approved by
either the legislature or the voters.
Senator Zharoff noted that the Governor has not deviated
from his original statements in both the state of the state
and state of the budget messages. He suggested that the
proposed bill represents a starting point for discussion.
The fiscal gap will not be closed by merely cutting the
budget and raising revenues. The state will have to "look
at starting to use some of the earnings of the permanent
fund which was the original intention of setting the whole
permanent fund up in the beginning." Many of the items
suggested within Section 1 represent suggestions of the
long-range fiscal planning commission.
Sec. 2. Contains provisions relating to sweep and payback
requirements of the constitutional budget reserve.
Subsection (b) would draw moneys from the reserve to make up
for revenue shortages next year.
Secs. 3 and 4. Relate to one-time, lump-sum amounts
required under contract terms for IBU and Masters, Mates,
and Pilots' agreements. They were part of the
administration's original budget submission for FY 97,
although the moneys could be paid in FY 96. Funding is thus
shown as a supplemental request rather than a new FY 97
amount. In response to a question from Co-chairman Frank,
Mrs. Slagle acknowledged that funding reflects a signing
bonus.
Sec. 5. Reflects the supplemental previously requested for
classified employees at the University of Alaska. Funding
would cover amounts not appropriated through contract for FY
95 and 96. It reflects approximately 3 percent.
Sec. 6. Contains previously requested supplemental funding
of approximately 3 percent for the community college
federation of teachers for FY 96.
Sec. 7. Contains $720,000 for the Copper River Highway
settlement. It includes remediation, public notices, and
other requirements of the consent decree in United States v.
State (A92-24CIV).
Sec. 8. Contains a $250,000 general fund appropriation to
the Alaska Marine Highway System fund in conjunction with
Sec. 35 which adds additional moneys to the FY 97 operating
budget to cover items not funding by conference committee.
The administration believes there is need for additional
funds in this area.
Sec. 9. Provisions relate to the Dept. of Health and
Social Services. Subsection (a) provides for an extended
lapse date for $1.5 million in Medicaid funds to continue
them into FY 97 for home and community care for the elderly.
The extension continues a program begun in the present
fiscal year to develop alternatives to nursing homes for
elderly care. An additional $1.5 million is contained
within subsection (b), and $250,000 is contained within Sec.
23.
In response to a question from Co-chairman Frank concerning
the children's trust, Mrs. Slagle advised of funding from
federal Medicaid reimbursements not yet received.
JANET CLARKE, Director, Division of Administrative Services,
Dept. of Health and Social Services, came before committee.
As background information, she advised that the Medicaid
program spends $5 to $6 million a week. When a reduction in
caseload or costs occurs, it translates to "fairly large
dollars." Sec. 9 (a) represents a project currently
underway through an RSA with the division of senior
services. The division is using the moneys to build
infrastructure, provide grants for assisted living homes,
and build up home and community based services. That is in
conjunction with the two-year moratorium on the certificate
of need the legislature passed. The department is concerned
that all projects will not be done by June 30, hence the
request for extension of the lapse date.
In response to a question from Senator Sharp, Ms. Clarke
advised that some of the projects do not qualify for
Medicaid reimbursement. Requests within Sec. 9 are thus
general funds.
Answering additional questions regarding the building of
infrastructure, Ms. Clarke explained that grants cover
projects that "look at assisted living homes," allow
assisted living managers to make improvements to home so
they qualify as assisted living residences under licensing
requirements, etc. These homes are an alternative to
nursing home care.
Senator Rieger raised a question concerning the
reappropriation listed at Page 5, line 17. Ms. Clarke
explained that it relates to Medicaid waivers. Senator
Rieger asked if the request relates to a new item or one
included in the Governor's original budget request. Ms.
Clarke acknowledged that it represents a new item. She
clarified that the project was under consideration by the
department last fall. It was not, however, included in the
FY 97 budget. Senator Rieger took exception to a request
for increased spending. He further questioned where the
proposed reappropriation would be taken from, saying that
the waivers program appears to have the most potential for
de-institutionalizing individuals? He attested to work on
behalf of constituents in an effort to get SED youth out of
institutions. The argument has been that there is not
enough money in the waivers program to cover needs. There
now appears to be a surplus of $1.5 million. Janet Clarke
noted that subsection (a) reflects work actually underway.
The waiver component consists of a combination of waivers
(elderly waivers, DD waivers). General fund dollars are
primarily for the elderly. Funding is not year-end money.
It relates to ongoing activities and projects within the
department plan. Concern is that the projects will not be
completed by June 30.
Senator Rieger suggested that while subsections (b) and (c)
appear to extend lapse dates, subsection (a) appears to
reappropriate moneys to a different purpose. Ms. Clarke
said that subsection (b) and (c) are interrelated.
Subsection (b) references the Medicaid Non-facility
component. Subsection (c) is totally non-general fund. Ms.
Clarke attested to concern regarding optional services the
legislature "stopped funding two years ago." Much pressure
was placed on the department to restore those services.
While there was a 5 percent growth rate in the budget, there
is no increment for Medicaid in FY 97. That is why the
funds are excess. The department did not "turn on the
optional services this year" because it did not believe it
could sustain them into FY 97.
In conversation with the Mental Health Trust Authority, it
was determined that many of the beneficiaries qualify for
Medicaid. Beneficiaries have attested to difficulties
associated with living without new eye glasses or dental
services. The Mental Health Trust Authority reserved $1
million of its funds for Medicaid. The department could not
turn on these services for mental health beneficiaries
alone. If the lapse date on Medicaid non-facility funding
is extended, the department could turn optional services on
for nine months for all Medicaid clients. Pent up demand
for the services will require approximately $5 million.
Subsections (b) and (c) are thus interrelated, and one
cannot be done without the other.
Senator Rieger attested to reluctance of Mental Health
Authority trustees to expend more than $6 million of the $20
million in Mental Health Trust earnings for FY 97 and asked
what changed between debate on SB 413 and funding proposed
in SB 1005. Janet Clarke explained that the Mental Health
Trust Authority reserved $1 million from Medicaid, last
fall, in anticipation of need for transition to a new
Medigrant program. Since nothing has yet happened to
reform Medicaid at the national level, the $1.5 million is
viewed as a good initiative, on a short-term basis, to
assist beneficiaries.
Co-chairman Frank asked if funds within Sec. 9 reflect
moneys within the department budget or new requests not
before seen by committee. Ms. Clarke acknowledged that the
request was not included within the FY 97 budget. Co-
chairman Frank voiced frustration with the administration's
special session request for additional new moneys. He then
asked if SB 1005 contained further such requests. Nancy
Slagle advised of direction from Co-chairs to "find other
ways of funding things." She attested to statements by Co-
chairman Halford that if the administration wished to fund
certain projects, it "needed to find other funding sources
or get rid of projects that were included . . . in the
capital bill." Senator Phillips noted that the foregoing
comment was made in the course of capital budget
deliberations during the regular session.
Senator Sharp asked how the department intends to pay for
the $5 million reinstated program next year. Ms. Clarke
advised of proposed one-time restoration of services.
Regulations would be written in such a way that services
would not continue. Restoration is a priority of the
Governor. Senator Sharp suggested that priorities should
have been funded in the operating budget during regular
session. He voiced resentment at being faced with requests
for new projects and new money during special session.
Sec. 10. Contains the pay increase for both covered and
non-covered employees in the executive branch. Numbers
within subsection (a) may differ from the original
submission since they have been "adjusted down for the 1.4
percent half of CPI" rather than the original 1.5 percent.
Sec. 11. Contains monetary terms for IBEW employees within
the court system.
Sec. 12. Relates to non-covered court system employees.
In response to a question by Co-chairman Frank concerning
total compensation, Ms. Slagle advised that amounts within
Secs. 11 through 16 would have to be added.
END: SFC-96, FSS #1, Side 1
BEGIN: SFC-96, FSS #1, Side 2
Senator Randy Phillips inquired concerning general fund
dollar amounts in contracts for FY 98 and 99. DAN SPENCER,
Budget Analyst, Office of Management and Budget, advised
that numbers had previously been provided at 1.5 percent.
Those figures have not been adjusted to 1.4 percent. Mr.
Spencer agreed to provide the information.
Co-chairman Frank asked for the general fund total for
contracts for FY 97, advising of his recollection of $7.3
million. Mr. Spencer said he would provide the numbers.
Mrs. Slagle subsequently advised of a total of
$7,303,200.00.
Sec. 17. Contains reappropriation of funding from completed
DOTPF capital projects. Moneys will be used to match Corps
of Engineers funding for Bethel Seawall construction. The
amount involved is $552,600.
Secs. 18 and 19 also contain reappropriations for the Bethel
Seawall. Sec. 18 provides $650,000 from the Power Project
Fund, and Sec. 19 funds $400,000 from the Rural
Electrification Revolving Loan Fund. The request for
seawall funding was contained within an amendment to the
Governor's capital budget.
Discussion of the status of the two funds mentioned in Secs.
18 and 19 followed. Mrs. Slagle said that both funds are
active. If funding in Secs. 18 and 19 is not used for the
seawall, it would automatically flow to the general fund at
the end of the year.
As background information, Mrs. Slagle explained that when
statutes were passed to change the structure of energy
programs, the balance of the Power Project Fund was to be
transferred to the general fund on an annual basis during
the transition period before the new statutes became
effective. Due to an administrative error, that did not
occur. Funding that should have gone to the general fund
remains in the Power Project Fund.
Senator Sharp asked if applications from utilities for
revolving loan fund moneys remained ungranted. Mrs. Slagle
advised of interest and principal collections of $411,000
for the general fund. She noted that present information
does not show outstanding requests. She said she would
further review the matter.
[The following comments regarding capture of lapsed moneys
reflect verbatim transcription from the tape.]
CO-CHAIRMAN FRANK: Senator Rieger, did you have a question?
SENATOR RIEGER: Well, Mr. Chairman, I think it was
partially answered. I was curious how they could catch
money that was subject to lapse several years
ago. But I think . . .
NANCY SLAGLE: It was an administrative error, basically.
It wasn't something that was done automatically. It had
to take actual transactions. So it was, I don't know
if you'd say and employee error, or an administrative
error, that it did not happen. And it was just
recently discovered that that was there.
SENATOR RIEGER: [I'll just] give you a hypothetical. If it
had lapsed (let's say on August 11, 1994), if you wrote an
appropriation like this that said that the money that
was subject to lapse on August 10 is reappropriated,
would that still be a valid reapprop?
CO-CHAIRMAN FRANK: I see Jim Baldwin back there. He could
probably answer that for you.
NANCY SLAGLE: He certainly could answer it better than I
could.
CO-CHAIRMAN FRANK: Did you hear the question, Mr. Baldwin?
SENATOR RIEGER: Mr. Baldwin, the question is, What is the
validity of a reappropriation measure which names moneys
subject to lapse on a certain date that had
happened in the past?
JIM BALDWIN: That's already lapsed?
SENATOR RIEGER: Yes.
JIM BALDWIN: If money's lapsed, you can't reappropriate it.
SENATOR RIEGER: Even if the appropriation refers to the
money subject to lapse as of that date? That's fine. I
just want to know what the administration's
interpretation is of that type of provision.
JIM BALDWIN: Unless there's some way we could interpret it
to revive it--the fact that it was being reappropriated .
. . But, generally, if it's lapsed, it's lapsed. I
don't know that that's what we've done here. I don't .
. .
NANCY SLAGLE: No, not in this case. No, the money hasn't
lapsed. It's still there.
SENATOR RIEGER: Okay. But the administration's position is
[that] if it's lapsed, it's lapsed. It can't be revived.
JIM BALDWIN: If it's lapsed, it's lapsed. There's no
longer anything to reappropriate. The appropriation is
void.
[End of verbatim transcript.]
Co-chairman Frank inquired concerning total federal Corps of
Engineers funds for the Bethel Seawall. Nancy Slagle
advised of $4.5 to $5 million. Further discussion of Corps
of Engineers' funding followed between Co-chairman Frank and
SAM KITO, III, Legislative Liaison/Special Assistant, Dept.
of Transportation and Public Facilities. Mr. Kito attested
to a general fund match requirement of $1.7 million to
complete the project. He further advised of concern that if
the match is not made in FY 97, the project may be stopped.
The state would then incur additional remobilization costs
that would not be federally eligible, and the total cost of
the project would increase.
Senator Zharoff voiced concern on behalf of rural utilities
regarding funding within Secs. 18 and 19.
Sec. 20. Reappropriates $1 million of the anticipated lapse
from the AFDC program to construction of a treatment
facility at the Johnson Youth Center. An additional $2
million in Sec. 37 funds the full $3 million need.
Co-chairman Frank raised a question concerning one-time
items associated with the Governor's welfare program. JANET
CLARKE again came before committee. She explained that the
Governor's welfare reform reinvestment proposal primarily
funds ongoing child care and work programs. The only one-
time items were computer system investments. CSSB 136
(Fin) contains $3.5 million for the computer system. That
consists of $1.6 million in federal and $1.9 million in
general funds. General funds came from both the treasury
and case load reductions. In CSSB 136 (Fin) $4 million in
general funds for AFDC was reduced. The funding was then
reappropriated to a number of one-time items and then back
to the general fund. Approximately ten days ago, the
department re-examined lapse projections for Medicaid and
AFDC and determined that caseload reductions had continued.
That is where the $1 million within Sec. 20 was derived.
Co-chairman Frank asked if there was a connection between
the Johnson Youth Center and the department's aide to
families with dependent children program. Ms. Clarke
answered, "Not directly, no." Senator Phillips voiced his
understanding that Sec. 20 represents a transfer of $1
million in operating funds to capital. Ms. Clarke
concurred.
Senator Sharp voiced concern regarding use of lapsing moneys
that should be saved for other projects. Co-chairman Frank
agreed, saying that the practice reduces revenues available
for expenditure in the next budget.
Sec. 21. Reflects the anticipated $2.5 million in
reimbursement from the federal government for Medicaid
matching funds relating to education of Medicaid eligible
students. Funds would capitalize the children's trust fund
in addition to the $6 million already appropriated. Co-
chairman Frank asked if the request was part of the
Governor's original budget. Janet Clarke answered
negatively. She explained that the section appeared in a
House version of the reappropriation bill. It was later
dropped due to questions regarding the funding source. Co-
chairman Frank voiced his understanding that the $2.5
million reflects moneys flowing to the state. Sec. 21 thus
requests increased expenditure of new moneys coming into the
treasury, a request that was not included in the FY 97
operating budget. Ms. Clarke clarified that the $2.5
million represents unrestricted federal receipts. Nancy
Slagle advised of a similar situation, several years ago,
relating to the disproportionate share program at API,
wherein the state received a large amount of funding from
the federal government as an overpaid match. That money was
then appropriated by the legislature toward construction of
the new API facility. Ms. Clarke again clarified that the
foregoing request is tied to an administrative claim for
activity in school districts. The department is aggressive
in efforts to ensure that the state receives it fair share
of Medicaid funding. There was concern that Medicaid reform
would occur this year. That is why the department
conservatively budgeted these funds.
Sec. 22. Reappropriates anticipated lapse moneys from
longevity bonus grants to a Dept. of Administration project
to find efficiencies in the personnel system through records
automation and development. Co-chairman Frank voiced his
understanding that the department just received a $1.6
million supplemental and is now reappropriating $300.0.
Mrs. Slagle explained that the supplemental request was
based on April figures. Numbers for May indicated a $300.0
balance. ERIC SWANSON, Budget Analyst, Division of
Administrative Services, Dept. of Administration, came
before committee. He said that the number of applicants
changes from month to month. The initial estimate of $1.6
million appears high. The lapse is presently estimated at
$300.0. The actual number is unknown. Co-chairman Frank
inquired concerning the number of computer programmers
assigned to the personnel project. Mr. Swanson advised of
one contract position that is not quite full time.
Senator Rieger asked if the purpose of the reappropriation
(the personnel system project) was contained in the
Governor's operating budget. Nancy Slagle responded
negatively, adding that it would be a continuation of a
current-year project. Co-chairman Frank asked why the
request was made in special session. Mr. Swanson voiced his
understanding that the project reflects one of two capital
projects requested in FY 95. When the projects were
combined, a decision was made to apply funding to the other
of the two projects. That left the current project
unfunded.
Co-chairman Frank inquired concerning the status of the
project over the past two years. BEVERLY REAUME, Director,
Division of Personnel, Dept. of Administration, advised that
the project is just now starting. A pilot project is
scheduled for the coming summer. It will explore the
possibility of examining applications via imaging. The
original request for $650.0 was funded in FY 96 at a total
of $250.0. There is need to fundamentally change the way
the process works. Co-chairman Frank voiced his
understanding that the project was not sufficiently high in
priority for inclusion in the Governor's original budget
request. Ms. Reaume concurred that while the project was
submitted, it was not selected for inclusion. She further
advised that it has potential for saving money for all state
agencies. The current examination process is very
expensive.
Discussion followed regarding responsibility for personnel
work by the Division of Personnel versus transfer to
individual state agencies. Ms. Reaume said that the project
would allow personnel work to be done more effectively at
either location.
Sec. 23. Reappropriates $250,000 of the anticipated
Medicaid lapse to the Dept. of Corrections for conversion of
the Harborview Development Center to a correctional
facility. That request was before the legislature in the
capital budget.
BOB COLE, Administrative Services Director, Dept. of
Corrections, came before committee and advised of a total
project cost of $1 million to convert 50 beds at Harborview
to a medium security correctional facility. The City of
Valdez is interested in becoming a partner in the project.
If the $250,000 is appropriated, the community will match
$750,000. The cost is approximately $20,000 a bed. Co-
chairman Frank raised questions about the high operating
cost per bed. Mr. Cole explained that the purpose is to
create an intensive alcohol/drug abuse treatment program for
50 inmates at a time. Because of the intensive nature of
the treatment, the $220 per-bed cost per day is considerably
higher than the average $106 for confinement in a regular
detention facility.
Further discussion followed regarding inmate populations to
be involved in the program. Mr. Cole stressed that the
intensive program is intended to "shorten the length of time
they would spend in our facilities on their current sentence
and knock down the recidivism rate . . . ." In response to
comments by Senator Sharp, Mr. Cole advised that "the best
budget we've been able to get for this so far is about $2.7
million a year." Due to renovation needs, the department
did not request operating funding for FY 97 because it did
not believe it could get the program going until FY 98.
During additional discussion of benefits of the program
versus costs, Mr. Cole focused on avoidance of costs
associated with reduction of both incarceration time and
recidivism for those undergoing intensive treatment.
Additional discussion followed concerning historically high
operating costs for Harborview versus construction costs of
a new facility. Mr. Cole attested to ability to utilize
existing personnel at Harborview as well benefits from the
isolated location at Valdez.
Sec. 24. Nancy Slagle explained that provisions within the
section are new. It proposes to utilize $750.0 in earned
interest on criminal restitution moneys from Exxon Valdez
litigation for appropriation as a grant to the Kenai
Peninsula Borough for construction of the Kenai River
Center. It would provide for a visitor interpretive
facility in addition to the already established multi-agency
Kenai River Center. Mrs. Slagle advised of a memorandum of
understanding between the Kenai Peninsula Borough and the
state on the collaborative effort.
Senator Rieger inquired regarding the status of interest on
the $50 million, asking if it is restricted or general fund
revenue. Mrs. Slagle voiced her understanding it is
restricted in use. In response to further questions from
the Senator, Mrs. Slagle advised that she would verify
whether previous interest expenditures had been made and
whether they were in keeping with restricted use.
Referencing background information on the current project,
Mrs. Slagle noted that the activities directly relate to
restoration of natural resources injured by the Exxon Valdez
oil spill and are eligible for funding from criminal
restitution moneys.
Sec. 25. Reappropriates $100,000 in debt retirement funds
to the Dept. of Natural Resources for the state land status
geographic information system. Mrs. Slagle explained that
funds reflect previous G.O. bond balances that were cleared
out and returned to the debt fund. The geographic
information system was requested in the Governor's budget
but removed by the legislature.
Senator Rieger asked if funding had previously been taken
from the debt retirement fund. Mrs. Slagle answered that
moneys had previously been taken to offset other debt. The
state also has the ability to withdraw moneys for
construction projects.
Co-chairman Frank voiced his understanding that the debt
retirement fund was generally considered to be "sacred" and
expressed reluctance to "start dipping into debt funds to
pay capital projects." He referenced cautionary warnings
regarding how rating agencies and the debt, bond, and
capital markets would react to withdrawal of funds from AHFC
or AIDEA and suggested that they would "start looking pretty
askance at the state if we starting spending money out of
the debt retirement fund." Nancy Slagle directed attention
to capital projects within Sec. 37 and noted that they are
also proposed for funding directly from debt retirement.
They relate to deferred maintenance.
Co-chairman Frank said he could understand reduction of
future appropriations for debt retirement if there is a
change in debt service requirements. He questioned the
wisdom of appropriating directly from the debt retirement
fund. Jim Baldwin again came before committee. He directed
attention to statutes establishing the debt retirement fund
and noted language indicating that if a surplus balance
occurs, it could be used to fund capital projects. Nancy
Slagle acknowledged that balances had previously been used
to reduce debt service needs for the coming year. She
further advised that the administration only recently
determined that amounts put back into the debt retirement
fund were not included in calculations for debt service
needs for FY 97. Co-chairman Frank expressed reluctance to
establish a precedent for capital budget expenditure from
the debt retirement fund. He voiced his approval of past
removal of excess moneys from the account for return to the
general fund. Mr. Baldwin noted that the administration
could have first lapsed the moneys and then appropriated
them to the deferred maintenance projects. The
administration merely chose a more direct route.
END: SFC-96, FSS #1, Side 2
BEGIN: SFC-96, FSS #2, Side 1
In response to a question from Senator Donley, Nancy Slagle
acknowledged that there was no relationship between debt
retirement moneys and the proposed geographic information
system. The $100,000 is simply available money. Co-
chairman Frank attested to the fact that the Governor
originally requested $350.0 and the legislature provided
$200.0. Mrs. Slagle concurred.
Sec. 26. The $400,000 in carry-forward funds would restore
the base in executive office operations. The conference
committee effected a $437,700 reduction to the Governor's
original request. Co-chairman Frank said that the reduction
was made based on knowledge that the Governor had a carry
forward of $1.4 million. In making the cut, the legislature
allowed the Governor $1 million over his request. Nancy
Slagle explained that the request is intended to "go into
the base of the Governor's budget for calculations for
future years." There is concern that in discussion of the
Governor's base versus the Governor's carry forward, the
$400.0 will get lost. Co-chairman Frank concurred in
confusion surrounding the issue and cited legislative action
to stop that type of funding, saying that it distorts the
budget.
Senator Randy Phillips asked for a comparison of percentage
cuts to both the Governor's and the legislature's budget for
last fiscal year and this year. Co-chairman Frank said $1
million was cut from both budgets. That was based on
allowing the Governor the $1.4 million carry forward.
In response to a question from Senator Rieger asking what
the $400.0 would be expended upon, Mrs. Slagle referred to
general office operations. The majority of the costs
associated with executive operations relate to personal
services costs.
Sec. 27. Provisions are similar to a section within SB 136.
This section changes the language slightly and adds:
to meet its duties under the Federal Telecommunications
Act of 1966 (P.L. 1040104).
The change makes the funds capital so they can be used to
implement the federal act. Conversion to capital means
there would be no effect on regulatory cost charges.
Senator Sharp noted that unspent amounts are to be used to
reduce regulatory cost charges in subsequent years.
Addition of the foregoing language would not allow for that
use. It would earmark the funding for implementation of
federal law. Mrs. Slagle concurred. Senator Sharp argued
that the regulatory charge is levied upon and paid by all
utilities. The proposed language would earmark expenditures
to telephone services only.
Sec. 28. Relates to failure of the effective date on HB
412. Language says that notwithstanding that vote, the
effective date is July 1, 1996. In response to a question
from Senator Rieger, both Mrs. Slagle and Jim Baldwin agreed
that passage would require a two-thirds vote.
Sec. 29. Deals with the disparity issue in the foundation
formula program. It was included in the original
supplemental. Since SB 244 did not make it through the
process to take care of the disparity issue, the
administration is once again requesting a supplemental
realignment of funds to achieve a temporary fix. Co-
chairman Frank asked if the fix would apply only to FY 96.
Mrs. Slagle responded affirmatively. KAREN REHFELD,
Director, Administrative Services, Dept. of Education, came
before committee. Co-chairman Frank asked if the
Commissioner or anyone within the department had asked the
Governor to put the issue on an amended call for the special
session. Mrs. Rehfeld attested to considerable discussion
of SB 244 and whether it would be included in the
proclamation. The Governor decided to limit the items in
the special session. For that reason it was not included on
an amended proclamation. Co-chairman Frank asked if the
department requested that it be "put on a call." Mrs.
Rehfeld reiterated that it had been discussed. She further
expressed concern for "the potential for FY 97." Conference
committee action on foundation formula funding for FY 97 was
based on the assumption that SB 244 would pass. Co-chairman
Frank agreed. He acknowledged that if SB 244 is not passed,
the education budget will be short funded for the coming
year. He then questioned why it was not added to the call.
Mrs. Rehfeld said that passage of SB 1005 with existing Sec.
29 would correct the disparity for FY 96. Absent passage of
SB 244, the administration would come before the legislature
for supplemental funding for FY 97 for both the foundation
program and "a disparity fix."
Discussion followed regarding funding contained within SB
244.
In response to further questions regarding Sec. 29, Mrs.
Rehfeld explained that the proposal would use anticipated
lapse moneys for FY 96 for named recipient grants. Co-
chairman Frank voiced his understanding that the current
approach would spend approximately $1 million more than the
approach within SB 244. Mrs. Rehfeld concurred.
Sec. 30. Contains provisions to take care of failed
effective dates on SB 136.
Co-chairman Frank asked if the bill contains a provision for
the three-quarter vote on budget reserve expenditures.
Nancy Slagle referenced Sec. 2.
Senator Phillips directed attention to Page 13, Lines 11
through 16, referenced respective extension of lapse dates
to July 1, 1994, and July 1, 1995, and asked what types of
funds would be involved. Mrs. Slagle said she would provide
information on funding sources.
Co-chairman Frank provided the following recap of funding
within SB 1005:
1. $52 million in total funds
2. $30 million in general funds
3. $6.5 million in new requests
He noted that the foregoing compares to the administration's
position on adjournment night that it could:
get by with $5 million in capital, $5 million in
operating [neither of which the legislature
accepted] and then at issue were the contracts for
$7.3 in general funds and a total of over $10
million, generally.
Mrs. Slagle explained that the bill now presented by the
administration reflects "going back a few steps [to] the
starting point in your discussions." Co-chairman Frank
asked if the legislature was supposed to take the request
seriously or "start where we left off." Mrs. Slagle
responded:
I don't think that he expects you to back up. I
think he wants you to go ahead and pick up from
where you were at a couple of nights ago.
The bill contains all of the items under discussion.
Senator Sharp directed attention of Secs. 35 and 36 and
asked if the Dept. of Fish and Game is requesting an
additional $2.6 million for new items beyond what the
legislature has already passed. Mrs. Slagle responded,
"Yes, these are all additional items to what you passed."
They address specific areas that were reduced in conference
committee. Senator Sharp took exception to such requests in
special session, after many months of budget work.
Co-chairman Frank recited individual department requests and
associated amounts from Pages 14 through 16 of the bill.
Mrs. Slagle noted that the $470.0 for the Ft. Richardson
Correctional Facility corresponds to the amount in the
capital budget. It was included in the original capital
request.
ANNALEE McCONNELL, Director, Office of Management and
Budget, came before committee. She clarified that the
proposed bill represents items addressed by the
administration as operating budget concerns as well as
fiscal notes that have not been fully funding. She cited
critical legislation pertaining to joyriding, domestic
violence, and welfare reform as examples. It also deals
with capital items still under discussion between the
administration, majority, and the minority. She
acknowledged that perhaps not everyone was aware of ongoing
discussions but stressed that these items were not "simply
sprung on the committee." The administration advised both
Senate President Pearce and House Speaker Gail Phillips of
willingness to achieve "some resolution that would be a
lower dollar amount than that total." It was felt
appropriate to put something on the table, at this time,
that reflects the administration's concerns.
Co-chairman Frank asked if the Governor wants to spend an
additional $50 million. Ms. McConnell noted that $50
million is not the general fund total. It includes federal
funds, international airport funds, etc. She voiced the
administration's belief that all the items should be
discussed and considered. They reflect items upon which the
parties were attempting to reach resolution. Ms. McConnell
further stressed that requested funding would not bring the
total up to the Governor's amended budget. The legislature
has made reductions which the administration has not
contested.
ADJOURNMENT
The meeting was adjourned at approximately 5:50 p.m.
| Document Name | Date/Time | Subjects |
|---|