Legislature(1997 - 1998)
04/03/1997 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
April 3, 1997
9:10 A.M.
TAPES
SFC-97, # 74, Sides 1 & 2 (000-589, 589-143)
CALL TO ORDER
Senator Bert Sharp, Cochair, Senate Finance Committee,
convened the meeting at approximately 9:10 A.M.
PRESENT
In addition to COCHAIR SHARP, COCHAIR PEARCE, SENATORS
PHILLIPS, TORGERSON, PARNELL and ADAMS were present when the
meeting was convened. SENATOR DONLEY arrived as the meeting
was in progress.
Also Attending:
CHRIS CHRISTENSEN, General Counsel, Judicial Branch; NICO
BUS, Chief of Financial Services, Support Services Division,
Department of Natural Resources (DNR); JOAN BROWN, Fiscal
Analyst, Office of Management and Budget (OMB); TRACI
CRAMER, Administrative Officer, Exxon Valdez Oil Spill
Trustee Council; ANNALEE MCCONNELL, Director, OMB; fiscal
analysts and aides to committee members.
Also Attending Via Teleconference:
TERI CARNS, Senior Staff Associate to Judicial Council; MILT
WILTSE, Director, Division of Geological and Geophysical
Surveys, DNR; KEN BOYD, Director, Division of Oil and Gas,
DNR.
SUMMARY INFORMATION
HB 58 CIVIL ACTIONS/ATTY FEES/INSURANCE
Testimony was heard regarding fiscal notes from CHRIS
CHRISTENSEN and TERI CARNS. The bill was HELD for
further consideration.
SB 107 APPROPRIATIONS: CAPITAL & FUNDS
Testimony was heard on capital project requests from
representatives of the Court System and the Department
of Natural Resources. The bill was HELD for further
consideration.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 58(FIN) am
"An Act relating to civil actions; relating to independent
counsel provided under an insurance policy; relating to
attorney fees; amending Rules 16.1, 41, 49, 58, 68, 72.1,
82, and 95, Alaska Rules of Civil Procedure; amending Rule
702, Alaska Rules of Evidence; and amending Rule 511, Alaska
Rules of Appellate Procedure."
CHRIS CHRISTENSEN, General Counsel, Judicial Branch, stated
that their fiscal note was low considering the massive
number of changes the bill proposes. He noted that most
parts of tort reform didn't help the state save money, but
did help litigants. The fiscal impact of most of the
changes would be either neutral or impossible to predict.
There would be a slight impact on the way cases were
handled. For example, the defendant has the option of
making periodic payments for amounts in excess of $100
thousand. Extra judicial time would be involved in that the
judgement would have to set up the payment schedule and take
testimony from witnesses, and resolve future disputes if
payments were not being made. Section 15 relates to
collateral benefits and requires the jury to consider them,
rather than the judge under current law, which would add
jury expenses. Section 23 modifies the rate at which
prejudgment interest is accrued by changing it from a fixed
rate to a floating rate. This would require a new rate to
be set yearly, necessitating new computer software and
additional clerical time. Continuing, MR. CHRISTENSEN
testified that there would be an increase in the medical
malpractice 3-person expert advisory panels because of the
inclusion of malpractice claims against government
attorneys, but the cost would be minimal, and was not
included in the fiscal note. Some judicial costs would be
saved regarding motion practices, but would be offset by
longer trials and increased appeals. It has been estimated
that the bill would result in increased litigation for five
to seven years until all the issues were settled. In
response to a question from SENATOR ADAMS, MR. CHRISTENSEN
responded that the fiscal note he was referring to was dated
3-11-97 for $19.4 thousand.
SENATOR ADAMS commented that one of the stated reasons for
tort reform was because the court system was clogged, yet
their fiscal note was low. Based on that, he doubted the
truth of that reasoning and believed the bill should not be
before the legislature. He questioned the number of tort
cases. MR. CHRISTENSEN stated that torts were a very small
percentage of total cases before the courts, excluding small
claims. There were less than 1,500 tort cases last year,
out of approximately 140 thousand total cases. SENATOR
ADAMS questioned the argument that most civil lawsuits were
frivolous. He referred to the court system's 1995 annual
report indicating that most cases have merit. MR.
CHRISTENSEN confirmed that the percentage of lawsuits which
are dismissed or fined as frivolous was very tiny, but did
not have exact figures. SENATOR ADAMS cited additional
statistics regarding tort cases, making the argument that
the bill was not needed. He reiterated that because of the
small fiscal note the bill did not do anything.
TERI CARNS, Senior Staff Associate to Judicial Council,
testified via teleconference from Anchorage. She spoke
about the Judicial Council fiscal note that covers two
areas. One was an alternative dispute resolution program
review at a cost of approximately $8,000 for a contractee to
do that work. The other was a review of settlement data.
It would provide an opportunity to have confidential data
available for analysis to the Judicial Council, which would
then be reported periodically to the legislature and the
court at a cost of approximately $18 thousand.
COCHAIR SHARP noted there were no additional questions. He
stated the bill would be HELD for further consideration.
SENATE BILL NO. 107
"An Act making and amending capital and other appropriations
and to capitalize funds; and providing for an effective
date."
CHRIS CHRISTENSEN, General Counsel, Judicial Branch,
referred to their first priority project on page 29, line
22: a request of $1.375 million to begin the replacement of
the court systems recording equipment. He noted that Alaska
was the only state that did not use court stenographers.
All court cases were electronically recorded. Last year
they produced about 52 thousand cassette tapes. From those,
over 110 thousand pages of transcript were prepared. If
stenographers were used, they would need at least fifty at
range 17 or 18, based on outside salaries, so it saves the
state approximately $3 million in salaries every year.
However, every fifteen years the recording equipment needs
replacement. The appropriation would replace the peripheral
equipment that supports the recording, such as microphones,
mixers and amplifiers. The recording machines would be
purchased next year. They plan to go to PC-based digital
system that would provide better quality recordings. There
was additional discussion about equipment based on an
inquiry by SENATOR PHILLIPS.
MR. CHRISTENSEN brought up the second priority, that being
$580 thousand to continue code upgrades for the 1974
Anchorage courthouse which houses the supreme court, the
court of appeals, the public law library, the family law
courts, the domestic violence courts and the night
magistrate. A 1993 condition inventory showed over a
hundred code violations and they received a closure order
from the fire marshall. The appropriation would be
primarily used for fire protection, accessibility under the
Americans with Disabilities Act, seismic resistance, energy
conservation and indoor air quality.
The third priority was deferred maintenance. MR.
CHRISTENSEN acknowledged the legislature planned to take a
different approach to deferred maintenance, so he did not
elaborate on the request and concluded his testimony.
NICO BUS, Chief of Financial Services, Support Services
Division, Department of Natural Resources, presented the
department's capital projects requests. The first was on
page 16, line 8, that being $300 thousand for conversion of
manual plats to digital format so it would be electronically
accessible. The request would enable 420 township
conversions within an ongoing six year project which was
nearing completion.
SENATOR DONLEY requested identification of the corporate
receipt sources. MR. BUS responded that the first project
was funded from AIDEA receipts.
The next project on line 10 was $400 thousand to delineate
potential coalbed methane drilling targets to encourage
private sector exploration and development in meeting rural
energy needs. It would provide for permits for seismic
testing and surveys, limited drilling, data collection and
processing, and reporting. In response to a question from
COCHAIR SHARP, he stated last year's appropriation was $400
thousand. The funds were from AIDEA.
MILT WILTSE, Director, Division of Geological and
Geophysical Surveys, DNR, testified on the project via
teleconference from Fairbanks. He explained that the funds
last year were to start building an exploration model for
coalbed methane, a new endeavor which was being conducted in
conjunction with the Texas Bureau of Mines on contract.
There was additional discussion about the expenditure of the
previous year's appropriation.
MR. BUS continued with the next project on line 11. It was
$200 thousand for parks emergency repairs, a minimal amount
considering over $10 million of repairs have been
identified. This appropriation would focus on health and
safety issues such as outhouse and roof repairs in the areas
of Kodiak, southeast Chugach, Kenai, Mat-Su and the northern
region. SENATOR PHILLIPS expressed surprise that the
governor was requesting such a small amount considering the
importance of parks and campgrounds to tourism. He inquired
about the thought process behind the minimal request. MR.
BUS responded that it was basically a prioritization process
among many needs and the request was close to what was
appropriated last year. SENATOR PHILLIPS requested the
original list of requests submitted to the governor's
office.
SENATOR DONLEY noted the funding request was from general
funds and thought it would be justifiable to use AIDEA
receipts because tourism was an economic issue. He
requested a response from OMB.
JOAN BROWN, Fiscal Analyst, Office of Management and Budget,
explained that decisions about which projects to use AIDEA
receipts for were based on whether they were economic
development projects and the amount of AIDEA funds
available. Parks were funded with general fund money.
In response to a question from COCHAIR SHARP about program
receipts, MR. BUS explained that the revenue from parks
facilities exceeded the state budget by $100 thousand, so
the administration allocated that amount of program receipts
to the general fund.
The next item was reforestation on line 12. According to AS
41.17.060, the state can deposit 25 percent of timber
revenues into the timber reforestation fund. $100 thousand
of AIDEA funds would reforest 400 acres in interior and
southcentral Alaska, specifically in the Tanana valley and
Kenai.
Line 13, Airborne Geophysical and Geological Mineral
Inventory for $400 thousand, was the next project. These
projects have been successful in the past in attracting the
mineral industry to areas with potential. Line 15, Oil and
Gas Areawide Lease Database for $270 thousand, would include
all new tract releases, previous tract leases and mapping so
that the industry and the department had the information
readily available to speed up the process. The funds were
from AIDEA.
End SFC-97, #74, Side 1, Begin Side 2
MR. BUS continued with the next DNR project on line 16, the
National Petroleum Reserve Technical Studies for $400
thousand. The project from AIDEA funds seeks to promote
renewed exploration activity in the reserve by supporting
geological and geophysical studies in key areas. Much of
the work would be contracted out to private sector.
MR. WILTSE offered additional information on the project,
noting the program was designed to get at subsurface data
for new models for the NPRA area.
KEN BOYD, Director, Division of Oil and Gas, DNR, testified
via teleconference on the previous project regarding the
areawide leasing database. He indicated that areawide
leasing had implications for the future of the state and it
was important to have adequate maps indicating what was for
lease, what had been leased and what the status of leases
were. In response to a question from SENATOR TORGERSON, he
explained that the current database was small and used on an
ad hoc basis. With areawide leasing, the database would
have to be completed, modernized and maintained. They
wanted to produce their own maps in house, showing the
changing land status. The project would provide that
capability. SENATOR TORGERSON asked if the amount of money
would be all that was needed to complete the project. MR.
BOYD confirmed.
MR. BUS brought up the next request on line 18, that being
the Oil and Gas Electronic Interface with Industry for $150
thousand. It would get the department and the industry on
the same line regarding data transfers with the purchase of
software. It would streamline and speed up the transfer of
data between the different groups. It was a one-time item
from AIDEA funds.
The next item, line 20, was the use of AIDEA funds for
streamgaging in different rivers to determine the volume of
water available for development projects. The project was
matched with federal funds from the USGS.
Lines 21 and 22, Value Added Timber Sale for $230 thousand
and $75 thousand respectively, would deal with the Tok
Delta, Kantishna, Wrangell and Ketchikan areas. It was from
AIDEA funds.
The next project was on line 23 for Mount McKinley Meat
Plant Renovations and Repairs in the amount of $100
thousand, coming from AIDEA funds. The roof and boiler were
in desperate need of repairs.
MR. BUS noted the next three projects were federal grants
passed through to organizations that wanted to develop
projects. The grants were awarded to non-profits and
municipalities for four categories. The state acts as
custodian of the grants. The recipient of the National
Historic Preservation grants went predominantly to the
Alaska Historical Preservation Organization in the
department.
The Recorder's Office Information and Imaging System on page
17, line 4, was a new project to streamline an antiquated
process. It would automate the process through imaging
technology used in other states. It was considered urgent
and would allow the recorder to gain efficiency with a turn-
key system. It was felt the investment would return many
times over by speeding up the process.
Line 6, the Old Eagle School Site School Clean-Up for $65
thousand, was for clean-up of soil contamination on the
state-owned land. There had been a supplemental request of
$100 thousand for removal of the buildings. In response to
a question from COCHAIR PEARCE, MR. BUS explained that the
village of Eagle sued the state for abandonment of the
buildings which were a health and safety issue. The state
would like to transfer the property to Eagle. The building
was received in 1967 from either the BLM or the BIA. The
state tried to get the feds to carry some of the clean-up
expense but was unsuccessful because of the length of time
involved. COCHAIR PEARCE questioned why the state was
giving the land away. MR. BUS was uncertain but would
follow up on the inquiry.
The next item was $15 million out of the Oil Spill Response
Fund for the Exxon Valdez Oil Spill Trustee Council Small
Parcel Acquisitions on line 7.
TRACI CRAMER, Administrative Officer, Exxon Valdez Oil Spill
Trustee Council (EVOS), testified that the money would allow
the agency to have authority to purchase parcels that were
affected by the oil spill. She stated that it was a
vigorous public process and explained. In response to a
question from SENATOR TORGERSON, she clarified that they
currently come back to the Legislative Budget and Audit
Committee for purchase authority, but the committee
requested they reduce the number of RPL's, so their attempt
to do that was to put it in the capital budget. SENATOR
TORGERSON felt it was important to keep the oversight of
parcel by parcel approval.
SENATOR PHILLIPS wanted to know the net effect if the item
was deleted. MS. CRAMER explained there would be no impact
if the committee was willing to consider parcel by parcel
requests. She added that the difficulty of going through
the capital process was a matter of timing. If they don't
have the authority in the budget, they must wait another
year to get additional authority. There was additional
discussion on this issue.
ANNALEE MCCONNELL, Director, OMB, reiterated that they had
been explicitly asked last year not to have this be part of
the LBA process, but instead included in the capital budget.
She requested that if the legislature's desire was to leave
it in the LBA process, it be clearly stated so that they
don't have the timing problem.
COCHAIR PEARCE stated her position that the EVOS trustees
should come back to the legislature like everyone else does
for their purchases.
COCHAIR SHARP requested that assigned values and purchase
prices of the three projects listed be provided to the
committee. COCHAIR PEARCE stated her philosophy that state
ownership of what was now private land was not necessarily
the best use for the Exxon settlement because it did not
help restore benefit to the people of Prince William Sound.
MR. BUS brought up the next project on line 9, that being
the Fairbanks Building Repairs and Maintenance for $100
thousand. It would provide for asbestos removal and fix
electrical problems that pose dangers to the employees.
The next item was Wildland Fires Urban Interface Support for
$100 thousand on line 10. It would allow purchase of excess
equipment from the federal government for various fire
departments, provide training, buy compressed air systems
and remote automated weather stations. SENATOR PHILLIPS
inquired if there was duplication of
anything the Department of Military and Veteran Affairs
(DMVA) was doing. MR. BUS responded that the purchases were
strictly for fire related activities and he did not believe
there was duplication.
Line 11, Fire Communications Equipment for $350 thousand,
was similar to the request in the DMVA. It would improve
communications to comply with federal mandates.
MR. BUS concluded his presentation with the request on line
13 for Fire Equipment Replacement in the amount of $100
thousand from the general fund for fire detection units,
chain saws and pumps.
In response to an earlier inquiry by SENATOR DONLEY
regarding the use of AIDEA funds for parks, ANNALEE
MCCONNELL explained they limited recommendations for AIDEA
projects to the $16 million declared by the board of
directors under the statutes passed last year. There were
other projects important for economic development, including
parks, but they did not want to exceed the dividend amount
declared by the board. In response to SENATOR PHILLIPS'
earlier question regarding the small request for parks, she
noted $150 thousand was appropriated last year, so this
request was more than last year. Additionally, there was a
supplemental request for severe emergency situations, which
added up to a total request of $400 thousand for the next
year.
RECESS
COCHAIR SHARP recessed the meeting at approximately 10:37
A.M., then reconvened, taking up SB 83 (Supplemental
Appropriations). Minutes for SB 83 on file.
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