Legislature(1999 - 2000)
02/04/1999 09:05 AM Senate FIN
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+ teleconferenced
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MINUTES
SENATE FINANCE COMMITTEE
February 4, 1999
9:02 A.M.
TAPES
SFC-99 #20, Sides A and B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:02 A.M.
PRESENT
In addition to Co-chair John Torgerson, Senator Sean
Parnell, Senator Dave Donley, Senator Loren Leman, Senator
Gary Wilken, Senator Al Adams, Senator Pete Kelly and
Senator Lyda Green were present when the meeting was
convened. Senator Randy Phillips arrived shortly
thereafter.
Also Attending: JOE PERKINS, Commissioner, Department of
Transportation and Public Facilities; NANCY SLAGLE,
Director, Division of Support Services, Department of
Transportation and Public Facilities; DENNIS POSHARD,
Legislative Liaison, Office of the Commissioner, Department
of Transportation and Public Facilities; THOMAS BRIGHAM,
Director, Division of Statewide Planning, Department of
Transportation and Public Facilities; GEORGE UTERMOHLE,
Legislative Counsel, Legislative Affairs Agency; CAROL
CARROLL, Director, Division of Support Services, Department
of Natural Resources; and aides to committee members and
other legislative members.
Attending via Teleconference: DICK MYLIUS, Resource
Assessment and Development, Division of Land, Department of
Natural Resources, Anchorage; JUDY ROBINSON, Land
Appraisals, Department of Natural Resources, Anchorage.
SUMMARY INFORMATION
SENATE BILL NO. 32
"An Act making and amending capital appropriations and
reappropriations and capitalizing funds; and providing
for an effective date."
Co-chair Torgerson called the meeting to order. He
outlined the meeting and said that Fred Fisher from
Legislative Finance would testify first with regards to the
Department of Transportation and Public Facilities. He
voiced a concern to the committee that perhaps over
authorizations had been made by the Legislature.
FRED FISHER, Fiscal Analyst, Division of Legislative
Finance was invited to join the committee. He provided a
quick overview of the DOT capital budget. He commented on
the surplus authorization and how this had evolved over the
past couple of years. Capital appropriations that are made
stay on the book or are administratively lapsed. Senator
Dave Donley asked if this meant State or Federal
appropriations. Fred Fisher replied State.
Mr. Fisher testified that the scope of the Federal system
makes it impossible for the Department of Transportation
and Public Facilities to be totally precise in their
estimates regarding the amount that goes in on a project by
project basis. He continued, saying that emergency funds
allocated are not always fully utilized and those unused
amounts contribute to an excess allocation fund.
New Federal legislation has allowed more highway funds to
be used on a discretionary basis. That has made another
contribution to the agency's discretionary budget.
In some cases the Legislature has advanced certain
projects. Those amounts are another contributing factor.
This issue was initially raised by the Division of
Legislative Budget and Audit and has been discussed by the
legislature since that time.
There has been a surplus spread over a period of time.
Since 1976 the department has been working to reduce this
surplus. It is presently at $764 million but they will
continue to try and reduce it. It could go down by as much
as $300 million - $400 million. He felt significant
progress had been made to get this surplus off the books.
Approximately $315 million pertained to this current year
and about ten percent or $79 million to FY 98.
There followed a brief review of the DOT capital budgets
from 1993 to 1999. It had been a fairly simple
appropriation structure. In FY 99 a seventy-percent money
match was made and was allocated through individual
projects. There were twenty-one individual appropriation
items as compared to only three or four over the past
years. This structure has become increasingly complex.
Mr. Fisher then turned to the loss of mobility of dollars
and the potential loss of Federal monies. Assurances must
be provided for matching funds on these projects in order
to capture Federal funds.
Senator Pete Kelly asked about match dollars. Mr. Fisher
said the agency has Federal dollars available, say for one
of the twenty-one projects. Assurances were needed from
the Legislature to provide match dollars in order to
capture this money.
Co-chair Torgerson asked if the Federal funds lapse? Mr.
Fisher said they came under Title 37 and there was no
provision for a lapse date. For the fiscal year 2000 the
Department of Transportation capital budget request for the
amount that goes in on a project by project basis structure
had gone full circle and come back for appropriations.
This was specifically for Statewide Programs and Aviation.
The department was now preparing for this negotiation
process.
Senator Torgerson asked regarding the ten-percent monies
not spent in 1998 and would these monies be tagged for
projects? Mr. Fisher said he did not know if this
assumption could be made. It depended on Federal
appropriations and normally match rates were discretionary
at twenty-percent under Federal law. Co-chair Torgerson
wanted to know if the money could be shifted to another
project? Mr. Fisher said no. Co-chair Torgerson asked if
money was being held for a particular project that it was
appropriated for? Mr. Fisher said yes. Sometimes there
was an amount that would be put into a project that they
were not able to use with Federal monies.
Senator Torgerson asked if there was over-authorization on
the funds? Mr. Fisher said they had been fairly careful
with the DOT budget and he did not think there had been any
over-authorization.
Senator Leman asked about appropriations and uncommitted
funds and their relation to Federal funds. Was it possible
there may be general funds available for reappropriation?
Or dollars available for something else? Is this net
result the result of this paperwork? Is there any money?
Mr. Fisher said that in some cases there may be match
dollars available from the 1998 and 1999 years. However,
the Legislature has put reappropriation language into the
capital budget which allowed DOT to go back and pull out
uncommitted monies.
GEORGE UTERMOHLE, Legislative Counsel, Legislative Legal
Services was invited to join the committee. He explained
that the Legislature had few approaches available for
authorizations currently on the books. One option would be
to take the administrative approach allowing an agency to
determine when to lapse funds. An alternative approach to
the Legislature was to go in and directly repeal those
expenditure authorizations. That money would then be gone
and no longer on the books. He would recommend those be
repealed at the appropriation level. By doing this on an
appropriation basis it could tie that money to the specific
appropriation. This would also allow for specific
extension on projects.
Future authorizations by the Legislature could continue
under the existing situation. Capital projects lapsed when
departments decided monies are no longer needed. The
Legislature could have something more definite and could
recommend a date certain. Repealing all lapse dates within
seven years would also allow for an extension if necessary.
Co-chair Torgerson asked about the end result. He was
concerned about a list of items that had been put in by
project, which had not been ranked high enough by the
department. He asked if it were possible to have project
by project appropriations listed and order that DOT apply
specific funds to specific projects added as another
section of the bill. Mr. Utermohle said he did not think
that such language should be in the appropriations bill.
Co-chair Torgerson said vetos were going on in the
department that even the Commissioner was not involved in.
It should not be left up to some low-level person to issue
vetos. He would like the Legislature to make the necessary
appropriations to insure they happen. Now they were forced
to amend the STIP and then get Federal monies. Mr.
Utermohle said this may be useful as a Legislative
statement of intent. As to substantive effect it would not
extend much more than beyond intent.
Senator Torgerson asked if this language would be subject
to a veto by the Governor? Mr. Utermohle said perhaps.
JOE PERKINS, Commissioner, Department of Transportation and
Public Facilities was invited to join the committee. Co-
chair Torgerson thanked the Commissioner for his
department's hard work on the handouts provided by them.
The first item referred to by the Commissioner was past and
current efforts to wipe out lapsed monies. He said they
just couldn't get out a rubberstamp to close out projects.
NANCY SLAGLE, Director, Administrative Services, Department
of Transportation was invited to join the committee. She
explained how they could acquire discretionary funds. They
need Legislative assurance in order to get these funds.
The Federal Aviation side needed to have Legislative
assurance beforehand. In the past, Federal Aviation did
not always agree with the projects DOT decided to give
priority to. Now they have a better rapport with the FAA.
Another item for concern was that general highway projects
sometimes run into problems or difficulties such as right-
of-way or environmental. She referred to her flow chart
and explained the process of closing out a project.
Billings, called a final voucher, were sent to Federal
Highways. A review was done at that time for additional
costs that may be eligible to be covered or other
ineligible costs. There were difficulties in taking
appropriations just blanket off the books. They may need
to have more authority to deal with unforeseen adjustments.
In the past four years they have opened three hundred
seventy-nine Federal highway projects in the State and
closed five hundred forty-four projects. The department
has made concerted efforts to get these projects off the
books. Further, they have eliminated $200 million of
excess Federal authority monies. Still, she felt that
there were some that could be eliminated. She explained
that a team of three people, shifted from their regular
duties, go back and look at projects and determine if they
can be closed. Now they have to go back and evaluate
before 1989. They were trying to evaluate the projects as
systematically as possible. She felt very good about the
accomplishments made in this effort.
Ms. Slagle then reviewed environmental issues and right-of-
way issues holding up some close outs. As she explained,
they were trying to find resolution to these technical
issues.
There was, then, the problem of excess authority. They
were trying to establish a departmental process whereby
they would go in and hand-remove any authority on any
projects sitting for more than ten years on the books.
Co-chair Torgerson asked if "hand-removed" meant "within
the department"? How could this be stopped from coming
back up by the same hand that removed it? Ms. Slagle said
appropriation authority could not be added without
Legislative approval. Once it is taken off it is off.
Commissioner Perkins further explained that this issue
needed to be looked into. He felt strongly about prior
projects that had lagged for perhaps twenty years. In
comment to Mr. Utermohle's suggestion of seven years he
suggested that it be ten years. He explained that FAA
monies, if the project is closed out within five years for
less money than appropriated by the Federal government,
that remaining money stays in Alaska. Other monies would
lapse back into the Federal pot.
Co-chair Torgerson asked if the Federal government could be
requested to reappropriate some of the lapsed monies for
other State projects. Commissioner Perkins said that if
all monies could not be spent for a specific project they
would go back into the national pot.
Co-chair Torgerson asked if the policies were done by
regulations? Commissioner Perkins said it was not agreed
upon policy or regulation. Co-chair Torgerson said there
must be discipline if the change was going to work. He
also agreed that it could be done for ten years, project by
project, as suggested by Mr. Utermohle.
Co-chair Torgerson asked if the project by project
situation needed to come first before the Legislature? The
Commissioner agreed. He said there were projects
authorized specifically and there was no way those monies
could be expended for a couple of years. Money will go
with the authorized project down the years. However, they
could have advanced another project if they would have had
the authorization.
(Tape #20 switched to side B, log 589 at approximately 9:57
a.m.)
Commissioner Perkins continued. He explained they were
going to be doing work in Wasilla and how it related to
matched funds. If there was a reasonable bid, they would
come back to the Legislature to get more matching funds.
Otherwise, the project would not go. They were usually
pretty good at estimating the bids, however, it would not
be usual for them to be high or low. This system affected
programs. The department would like to work with the
committee so they can have some flexibility but still meet
the concerns of the Legislature. If projects are added or
changed within the years and nothing is taken out, they
have more projects than money. Therefore, they rank the
projects they have by priority. He explained what happened
when a new project was then added. Does he keep his
ranking system? If the Legislature wants to insure they do
the projects they approve, there must be a whole left in
the STIP so the department can delete a project.
Otherwise, the money is not there to do the project. It
was sort of a two-way street. A new project cannot really
be added. Perhaps the department should provide a list to
the committee of added projects. He further reiterated
that he would do what the Legislature tells him to do if
the money is available. Perhaps this would simplify some
thought on how these projects should proceed forward. He
explained that if he decided to bump a project then he had
to tell the ranking committee and explain his decision.
Co-chair Torgerson said he thought they were not confined
to the STIP. Commissioner Perkins said they took out a
bridge project from the STIP that was not authorized last
year. Co-chair Torgerson said the Legislature could not
amend the STIP.
Senator Donley said he appreciated the Commissioner's
offer. If the committee goes project by project, the
Commissioner could ask the Federal government for an
amended STIP. The Commissioner explained that if monies
were not authorized by the Legislature he could not spend
any on projects.
Co-chair Torgerson agreed also with the offer but felt the
STIP must be amended. He said the Legislature needed
discipline to take a project out. He did not know if any
of the projects appropriated in last year's STIP were going
ahead.
TOM BRIGHAM, Director, Statewide Planning, Department of
Transportation and Public Facilities was invited to join
the committee. He explained the updated spreadsheet from
last year and the amended STIP as passed out at last week's
meeting. There were more TEA-21 monies than ISTEA. With
the exception of three projects everything has been put in
the FY 99 budget. Perhaps the Legislature should review
project by project so they could see that they have gone
forward.
Commissioner Perkins suggested this go through further
discussions at the subcommittee level.
Mr. Brigham explained the match side as real money and the
Federal money as authority. Senator Donley asked for
further explanation. There followed a brief discussion by
Co-chair Torgerson, Senator Donley and the Commissioner
regarding authorization. Co-chair Torgerson explained that
he added the Funny River Bridge project last year.
However, it fell under the ranking system, which was the
main frustration.
Mr. Brigham continued. He commented on the national
highway projects and noted they have moved the Marine
Highway into 1999. This was in addition to all other
projects that had been reevaluated and moved up into design
and construction for the year 1999. There were only three
projects that did not do too well. He felt the ranking
process was a fairly adequate way to handle this process.
Co-chair Torgerson agreed that they did not want to do away
with the ranking system, however it must be looked into.
Actually, he did not care about the ranking system, but
felt that if monies were appropriated for a specified
project then they should be followed through on. Mr.
Brigham explained that if legislative authority was given
for ten projects and they only have money for nine then
they have to choose which nine projects can be
accomplished. Co-chair Torgerson said he understood this,
however, if the Legislature has to tighten up they will.
Personally he did not feel that this was too far apart on
agreement. He would like to see an automatic amendment to
the STIP. The Commissioner felt that no one more than he
wanted to get the situation resolved with the Legislature.
He said he would cooperate one hundred percent to get this
accomplished.
Co-chair Torgerson said everyone would work together under
Senator Donley as subcommittee co-chair to resolve the
outstanding issues.
Senator Donley explained what he felt was wrong with the
current ranking process. There was one standard for rural
areas and they have no waiting period as compared to urban
areas. This was grossly unfair.
Senator Adams said rural programs and roads need to be
looked at because the roads may be going to a water source
or to a landfill site. Rural Alaska does have to meet
criteria, however, the same as others.
Commissioner Perkins referred to State roads. There are
roads that have no connection other than tourism. The
department was looking at the potential of developing and
doing some other projects with the money that could be left
in the pot. Mr. Brigham said that now the system has had
two or three years to operate and projects have been put
out to the public, the reason they have not suggested bush
or remote projects was because they were going through.
The demand for projects changes from year to year.
Transit was a better example than remote areas. Most of
the buses in the transit systems have been replaced around
the State. Remote area roads, in initial thinking, had a
priority on sanitation projects done in conjunction with
sanitation and village safe water projects. Senator Donley
said this was because of the way the department had
designed their priority system. Mr. Brigham concurred
saying there was a need to look at data and projects that
were coming into the system. It may be appropriate to set
up a "pot".
Co-chair Torgerson agreed because he felt gravel roads have
been left out. Otherwise the only way it would work was to
put a garbage dump at the end of each road and then it
would be taken care of.
Senator Donley referred to SB 263 over in the House. In
his testimony he had said that approximately eighty-percent
was going to public safety projects. One fifth of the
ranking went to other projects. The system has put the
urban areas seriously behind.
Co-chair Torgerson felt this was a good place to stop so
the committee could continue on with the rest of their
agenda. Commissioner Perkins made his concluding comments.
They are preparing a new STIP as required by Federal law
for 2000, 2001, 2002, 2003. This would be a document to
implement any suggestions.
(There followed a brief pause.)
SENATE BILL NO. 49
"An Act relating to missions and measures to be
applied to certain expenditures by the executive
branch of state government and the University of
Alaska from the state operating budget for the fiscal
year ending June 30, 1999; and providing for an
effective date."
Co-chair Torgerson set aside SB 49 for Monday. He then
called SB 6.
SENATE BILL NO. 6
"An Act relating to the disposal of state land."
Co-chair Torgerson then took up amended amendment #1.
Senator Adams REMOVED his amendment to amendment #1. Co-
chair Torgerson explained the amendment. It was his
understanding that the appraiser in the specific case at
hand did the wrong piece of property and that this was the
source of all the misunderstandings. He felt the problem
was with certification of appraisers and that there was no
problem with the Department of Natural Resources. Perhaps
they should take a new look at how appraisers are being
certified.
Senator Green said the seller should have established a
basic price. She noted that this was her concern with
regards to the Department of Natural Resources. Co-chair
Torgerson agreed. However, the Administration does not
care if the Department of Natural Resources sells property.
Senator Adams MOVED that his amendment to amendment #1 be
WITHDRAWN and WITHOUT OBJECTION was removed. Senator
Donley MOVED to WITHDRAW amendment #1. WITHOUT OBJECTION
it was WITHDRAWN.
Senator Donley MOVED amendment #2. Senator Green OBJECTED.
Co-chair Torgerson explained amendment #2. The amendment
would allow them to add some flexibility. Senator Green
felt line eleven was redundant to the original bill, noting
the language was far too broad. Co-chair Torgerson
explained that the two years were added last year.
Otherwise, up until then, an appraisal could be given the
next day.
Senator Donley explained to Senator Green that the
amendment was consistent with her point. Senator Green
said she would rather move towards an actual setting of a
price. She asked if there could be an arbitrary reason
requiring anything from zero, unless the director said that
there was evidence that there was a different value? Could
it be said that each piece of property be reevaluated? She
felt there was a bit of conflict. There was a short
discussion between Senators Donley and Green. Senator
Donley suggested a "clear and convincing" standard so the
State could seek another appraisal. This would free up the
director.
(Tape change #21, Side A, log 000.
DICK MYLIUS, Resource Assessment and Development, Division
of Land, Department of natural Resources testified before
the committee via teleconference from Anchorage. He
explained the process used for appraising lands for sale.
It depended on parcels and also on the rules as set out by
statute. In response to Senator Phillips, he said the
situation in Kenai was a unique one. He referred
specifically to AS 38.05.067. There was a permit to
purchase land from the Forest Service. And he explained,
there was no lease with the State.
Senator Donley MOVED to amend amendment #2, adding ".by
clear and convincing evidence." to line eleven of the bill,
making it consistent. Senator Adams OBJECTED and asked
the Department to respond.
Senator Kelly asked a question regarding grammar. Senator
Donley said the drafters would conform the language.
Senator Leman said there should be a standard for the
appraisal, but it did not have to be this high.
CAROL CARROLL, Director, Support Services, Department of
Natural Resources was invited to join the committee. She
commented on the amendment. She felt the standards should
be used as the department uses them. The "clear and
convincing" standard may be too high. Perhaps Dick Mylius
or Judy Robinson in Anchorage could comment to this.
Mr. Mylius explained that they were concerned with the
language of the "clear and convincing evidence" standard.
The department noted that value of land changes over a
five-year period. Current wording on amendment #2 would
make it more difficult for the department. Changing the
two years to five years would also make it difficult for
the applicant. The bottom line for the existing statute is
that it works very well.
Senator Leman said he would like to hear what the standards
were.
JUDY ROBINSON, Land Appraisals, Department of Natural
Resources testified via teleconference from Anchorage that
the USPAC non-profit group was made up of members from the
United States and Canada, put together at the behest of the
US Congress. The problem has to do with appraisals. She
said they followed the Federal guidelines as used by all
certified appraisers. The Department of Natural Resources
also followed this same procedure.
Senator Leman recognized the document she was referring to
and then asked her what recommendation the director at the
Department of Natural Resources followed? Ms. Robinson
said she did not think the director should be required to
follow USPAC.
(pause on record)
Co-chair Torgerson asked about the two-year time frame. It
did not take an appraiser to tell whether the value of the
property went up. He referred to Healy and that the land
values have not gone up at all. He then asked for comments
regarding the change to five years.
Mr. Mylius referred to appraisals over the counter. Ms.
Robinson said once an appraisal was done and property
offered to the public there was no need to do another
appraisal unless they thought the value had changed.
Senator Green referred again to amendment #2. She asked
about value changing within two years. Senator Donley
engaged in further discussion. Senator Adams suggested the
two-year question be posed to Ms. Robinson.
Senator Donley asked if they went to a two year plan then
would there would be a standard of review after two years?
How would one deal with more recent changes in value during
the two years?
Ms. Robinson responded that if there was a reasonable
belief to do a re-appraisal then she would do it.
Senator Green read line thirteen of amendment #2. Senator
Donley explained they could request this of the buyer.
Co-chair Torgerson HELD the bill in committee.
ADJOURNMENT
Co-chair Torgerson recessed the meeting at approximately
11:00 a.m.
SFC-99 (1) 02/04/99
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