HOUSE BILL NO. 307 "An Act making supplemental appropriations, capital appropriations, and other appropriations; amending appropriations; repealing appropriations; making appropriations to capitalize funds; and providing for an effective date." 1:37:51 PM Co-Chair Stoltze MOVED to ADOPT a proposed committee substitute for HB 307, Work Draft 27-GH2601\B (Martin, 3/1/12). There being NO OBJECTION, it was so ordered. PETE ECKLUND, STAFF, REPRESENTATIVE BILL THOMAS pointed to a ten page document prepared by the Office of Management and Budget (OMB): "FY12 Supplemental Schedule" (copy on file). He addressed the operating portion and language section initially. The following items changed: item 2 included a $50 thousand reduction from the initial $1 million request for the Public Defender Agency. 1:40:50 PM Mr. Ecklund explained that the four co-chairs from both the House and Senate Finance Committees worked together to create the committee substitute. He explained that reduced or removed items may be funded later in the session using another vehicle. He stressed that those items that were removed or reduced might come up again in a later supplemental request. Representative Doogan clarified that item 2 remained in HB 307, but was reduced by $50 million. Mr. Ecklund responded in the affirmative. Item 4 was reduced by $100 thousand of authority. He mentioned a note from the Legislative Finance Division (LFD) questioning whether the full request could be expended in the remainder of the FY 12 fiscal year, which prompted the reduction. Item 6, a request for $3,439,800 in general fund receipts to the Department of Commerce, Community and Economic Development (DCCED) was removed. Item 7 included a request for $250 thousand for receipt supported services, which was granted, but the funding sources were changed. The sources were split and $210 thousand remained as Receipt Supported Services (RSS) and $40 thousand consisted of general funds from corporate business licensing receipts. Item 10 included a request from Department of Education and Early Development (DEED) for $1 million, and the item was removed pending further discussions with the subcommittee chair and LFD. 1:43:41 PM Mr. Ecklund continued with items 15 and 16, which had been funded with alternate funding sources and were moved to the language section of HB 307. Item 22 on page 3 for $250 thousand to replace unrealized program receipts at Alaska Vocational Technical Center (AVTEC) was removed. Item 24 included $600,000 for fast ferry litigation. The item was approved and moved to the language section of the bill and became a multi-year appropriation encompassing FY 12 and FY 13. Item 25 was approved, but $300,000 was relocated to the language section and funding was divided into multiple year increments, again for FY 12 and FY 13. He moved to page 9 of the spreadsheet. Item 78 included a request by Department of Corrections (DOC) for reappropriation of $100 thousand for the Highland Mountain Center Land Transfer. The item was removed for further investigation to determine whether DOC was the correct department to receive the funds. He pointed to item 80, with a total request of $20,770,800. He noted that $20 million was removed from item 80, an optional retirement program for the university. He stated that the funding was removed to allow for discussions about alternative funding sources. 1:46:34 PM Representative Guttenberg asked whether the university settlement had been finalized. Mr. Ecklund responded in the affirmative. He elaborated that the item might be approved in the near future. He moved on to item 89 on page 10 of the spreadsheet. He pointed out that a provision existed in the original bill stating that additional unspent funding was swept into the budget reserve fund in FY 12. The provision was removed from the bill, but would be considered in other appropriation bills. The effective date of the bill changed to March 15. JOAN BROWN, STAFF, REPRESENTATIVE BILL THOMAS, discussed that some "negative" supplemental items were added to the language section of the bill totaling $715 thousand. The reason for the negative items was to address funds given to the agencies for FY12 for new positions. She stated that DCCED had $84,100 in economic development. The Department of Health and Social Services (DHSS) lost $200 thousand in front-line social workers and $250 thousand in nursing for positions remaining vacant. She noted Department of Law (DOL) lost $21,100 for vacancy in criminal appeal special litigation and $53,800 for a new child protection attorney and paralegal. She mentioned the $96,200 vacancy related to a fiscal note for SB 58, which passed the prior year. She noted that the Department of Military and Veterans Affairs (DMVA), $10 thousand was removed from the legislation in the army guard maintenance component. 1:49:26 PM Ms. Brown pointed to other changes in the legislation. The governor's original supplemental bill included a request for $2,620,300 to fully fund the Low Income Home Energy Assistance Program (LIHEAP) appropriations. The request included two contingency appropriations for FY 12 totaling $8 million. The contingency language was deemed ineffective. The supplemental bill repealed the contingency appropriations and instead appropriated a flat $8.5 million reducing the supplemental budget by $2 million. The amount fully funded the department's expected energy assisted heating costs. She pointed to the disaster relief fund located in the fund capitalization (Section 14), which increased from $3 million to $5 million in conjunction with the governor's amendment received on March 1, 2012. She pointed out a new repeals section in Section 16, which included an unworkable LIHEAP contingency appropriation. The lapse and retroactivity were adjusted accordingly. Mr. Ecklund explained that the changes discussed were found in the operating and language sections of the bill. He pointed out that James Armstrong would detail the capital portions of the bill. JAMES ARMSTRONG, STAFF, REPRESENTATIVE BILL STOLTZE, pointed to pages 7 and 8 of the OMB supplemental spreadsheet. Projects 55 through 72 were removed from the bill and would probably be included in the capital budget. He pointed to page 10 of HB 307, which included capital budget items. Items 12 through 18 addressed a grant to Anchorage to replace a fire and rescue station. He continued that items 16 through 18 included emergency repairs to the Cordova hospital. He mentioned that lines 28 through 30 were included in the governor's capital budget for FY 13. He explained that his office received an amendment from OMB to accelerate the item. 1:53:38 PM Representative Gara asked about items that had not been adjusted. He pointed to page 4, item 33 of the spreadsheet. He surmised that the funds had been received from the Red Dog Mine and would be spent on the Red Dog Mine. Mr. Ecklund responded in the affirmative. He stated that the funds were supplied by an outside entity to the state for a specific purpose. Representative Gara directed attention to page 3, line 23. He expressed that he felt like the item would never end. He noted that it was less expensive to hire in-house employees to do the work that had been done by outside attorneys. He expressed concern about the hourly rates of the attorneys. Co-Chair Thomas heard the argument every year. He explained that the Department of Law (DOL) lost employees and needed to contract the prior employees with expertise on a subject. He believed that the labor was contracted only under limited and special cases. Representative Gara contended that a new attorney could integrate the department's knowledge without trouble. He believed that a new attorney could be trained to continue litigation. 1:57:14 PM Mr. Armstrong added that backup for the four sections he had discussed were included in members' packets. REPRESENTATIVE BOB HERRON, informed the committee about a disaster over the winter break regarding the water/sewer line in Bethel that occurred due to winter weather. He explained that the cause of the disaster was the winter weather. He explained that the children did not return to school until mid-January. He appealed to the governor and the co-chairs of the finance committees to move the item into the capital budget. REPRESENTATIVE DAN SADDLER, explained that excessive winter snow had caused damage to the roof of the fire station, high density housing, and schools in the Eagle River area. He asked for committee consideration of the capital budget request, which was crucial to his community. Co-Chair Thomas stressed the immediate need for attention to the projects discussed by Representatives Herron and Saddler. Co-Chair Stoltze remarked on the intentional nature of the decision to include the emergency nature items. Non- emergency items were moved to the FY 13 capital budget. Co-Chair Thomas explained that the communities should not wait for the funding for emergency items. 2:01:32 PM Co-Chair Thomas CLOSED public testimony. Co-Chair Thomas asked whether there were any amendments. Co-Chair Stoltze MOVED to report CSHB 307(FIN) out of committee with individual recommendations. Representative Gara OBJECTED for purpose of discussion. He pointed to page 1, line 2 of the bill. He discussed the Office of Public Advocacy and would like to see funding restored for the $50 thousand requested in item 2. Co-Chair Thomas explained that funding had been requested. He detailed that the Office of Public Advocacy was fully funded and that the new position was filled. Representative Gara WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. CSHB 307(FIN) was REPORTED out of committee with a "do pass" recommendation and with no fiscal notes. 2:04:43 PM AT EASE 2:23:03 PM RECONVENED