Legislature(1997 - 1998)
02/04/1997 01:34 PM Senate L&C
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* first hearing in first committee of referral
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SENATE LABOR AND COMMERCE COMMITTEE
February 4, 1997
1:34 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Jerry Mackie, Vice Chairman
Senator Tim Kelly
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Mike Miller
COMMITTEE CALENDAR
SENATE BILL NO. 55
"An Act relating to the definition of certain state receipts; and
providing for an effective date."
- MOVED SB 55 FROM COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 55 - See Labor and Commerce Committee minutes dated 1/30/97.
WITNESS REGISTER
Ms. Annalee McConnell, Director
Office of Management and Budget
Office of the Governor
P.O. Box 110020
Juneau, AK 99811-0020
POSITION STATEMENT: Supported SB 55.
Mr. Royce Weller, Budget Analyst
Office of the Governor
P.O. Box 110020
Juneau, AK 99811-0020
POSITION STATEMENT: Supported SB 55.
Mr. Guy Bell, Director
Division of Administrative Services
Department of Commerce
P.O. Box 110803
Juneau, AK 99811-0903
POSITION STATEMENT: Commented on SB 55.
ACTION NARRATIVE
TAPE 97-4, SIDE A
Number 001
SB 55 AMEND DEFINITION OF "PROGRAM RECEIPTS"
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 1:34 p.m. and announced SB 55 to be up for
consideration.
MS. ANNALEE MCCONNELL , Director, Office of Management and Budget,
said this bill is intended to deal with an accounting catch 22.
Some items in their budget expenditures could grow and actually are
in the economic development area and are seen as a real positive.
Yet that increase in the expenditures counts as an increase in the
total budget. Either those activities get held back a little bit
because of the concern with increasing the State budget or other
areas take cuts to allow for the expansion in these "designated
program receipts."
The bill proposed last year started as a measure to look at test
fisheries and recognizeD the fact that there are many places where
the industry is very interested in getting a test fishery started.
The fishermen realize the State doesn't have unlimited resources
and are willing to pay for the costs of doing the test fisheries,
but they realize it's important for the State to be the one to
actually conduct the test so there's the proper kind of oversite.
Number 90
MS. MCCONNELL said that many of these "designated programs" are in
the economic development area ranging from test fisheries to
permitting or licensing.
This bill proposes not to take this off budget, but to show much
more consistently through the budget process all of the fund
sources whether they are federal funds, fees, or any other source
of money so people can get the full picture of what State revenues
and expenditures are. It would not treat them as part of the
unrestricted general funds category but set them into a different
category acknowledging that the cost of the service will equal the
revenue that's collected for it. This is being done on the basis
of some criteria that are outlined in the fiscal note. One of the
groupings is contracts and in this case there are a number of areas
where there would be an increase between '97 and '98. This ranges
from training classes and specialized training. There are
approximately $1.8 million worth of increases between the two
years' budgets.
The next category is restricted fees where they charge for a
particular service, for instance for the criminal background check
that's part of the teacher's certification process, and then they
have a category where by statute the legislature has determined the
cost of service should be fully borne by the users (mostly in the
commerce area). There are a couple of examples where federal law
restricts use of funds, like the WIC program.
MS. MCCONNELL said they would continue to show these in the budget
so everyone was well aware of them. The key point in all of this
is that you can have an increase in these arenas, mostly economic
development, without increasing the fiscal gap.
She said these receipts would still be treated as a revenue source
to the State. The legislature would still appropriate the revenues
so there would be no difference with legislative control. It would
make the process easier to understand.
MR. ROYCE WELLER said he was available to answer their questions
should they have any.
CHAIRMAN LEMAN said his problem with this approach is shifting from
general program receipts to non-general fund program receipts.
There are times when that is appropriate and there are other times
when that can be done as a way to make it look like we're reducing
spending, when in reality we're not. He thought it made sense,
though, if it wasn't abused. Another concern he had was that it
really was increasing State spending. He asked how they adjusted
the expenses and receipts if they weren't exactly the same. MS.
MCCONNELL replied to his first concern that they have taken that
into account by taking an apples to apples comparison. It is true
that changing the terminology does not indicate a cut in total
State spending, but they are still showing both years with and
without designated program receipts. They have made a point in the
last few years in letting agencies know they are scrutinizing the
areas funded by means other than general fund as stringently as
regular general fund items.
Number 244
SENATOR KELLY asked how this affects the fiscal gap. MS. MCCONNELL
explained that increases in these fees don't affect the fiscal gap
and the reason is, using the Badami Pipeline as an example, that
industry wanted to get the permitting for Badami and they were
going to pay the full cost of doing that. Although the total
expenditure of the Department went up, basically the Department and
industry entered into a contractual relationship saying they would
pay for all of the State's work. AS expenditures go up revenues
increase by the same amount. Therefore, there is no increase in
the fiscal gap.
SENATOR KELLY asked if they would increase the program receipts and
take them off budget. MS. MCCONNELL said they wouldn't be off
budget; they would still be appropriated by the legislature.
Instead of being in the column along with unrestricted general
funds, there is a separate category for designated program
receipts.
MS. MCCONNELL noted that SB 55 also contains some clean-up items
that weren't in last year's bill. It codifies corporate receipts
and clarified that the Children's Trust and the Public School Fund
are not part of the unrestricted general funds.
Number 310
SENATOR KELLY asked if they go to this approach the difference
between the amount from the general fund and the new program
receipts? MS. MCCONNELL replied that between '97 and '98 it's
about a $3 million increase. She said there is a small increase in
the category of restricted fees; much of it is in the economic
development area.
SENATOR KELLY asked if this accounting method were to be used in
the next fiscal year, did they have to pass this legislation this
session. She answered that they already use this approach, but
passing SB 55 would enable them to show it more clearly.
Number 328
MR. GUY BELL, Director, Administrative Services, Department of
Commerce, said his division sets professional licensing fees on a
bi-annual basis. This requires a lot of work aggregating the
licenses and projecting into the future. It is a cyclical
operation and they try to balance the number of professionals
renewing in any fiscal year by license category.
Another approach that has been successfully used with the
legislature allows the division to carry forward excess receipts
collected in one year into the next year. This is so that the
receipts collected in one year exceeding the amount spent by the
division are allowed to be carried over into the next fiscal year.
CHAIRMAN LEMAN asked if there was a substantial carry over each
year. MR. BELL said the division carried-over about $1 million
from FY 96 to FY 97, but '96 was a high year. He offered to get
the projected carry-over from '97, although, he noted, they are new
at doing projections.
SENATOR KELLY said he thought the bill had merit and moved to pass
SB 55 from committee with individual recommendations. There were
no objections and it was so ordered.
Number 382
CHAIRMAN LEMAN adjourned the meeting at 2:00 p.m.
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