HOUSE BILL NO. 30 "An Act relating to performance reviews, audits, and termination of executive and legislative branch agencies, the University of Alaska, and the Alaska Court System; and providing for an effective date." 1:35:40 PM Co-Chair Stoltze discussed that a pending amendment for HB 30 had been discussed at the prior meeting. He MOVED Amendment 1 in Representative Gara's absence. Representative Wilson OBJECTED. Representative Kawasaki asked for an explanation of the amendment. Co-Chair Stoltze remarked he was stalling for time and made several comments about the amendment. He believed the amendment recognized that cutting budgets was tough. Representative Gara joined the meeting. Co-Chair Stoltze asked Representative Gara to address the amendment. 1:38:11 PM AT EASE 1:38:40 PM RECONVENED Representative Gara addressed Amendment 1: Page 5, following line 21: Insert a new subsection to read: "(d) If the agency is not able to identify 10 percent of the general funds in the agency's budget appropriated from the general fund that could be reduced or eliminated using the criteria set out in (c)(2)(A) - (C) of this section, the agency shall identify which programs or elements of programs on the list required under (c)(2) of this section do not meet the criteria set out in (c)(2)(A) - (C) of this section." Representative Gara directed attention to page 5 of the legislation. He explained that the amendment was intended to provide the public and other legislators with additional information that would enable them to understand the 10 percent budget cut suggestions required by the legislation. He considered the amendment to be friendly. He furthered that without the amendment people would receive a document listing a series of cuts totaling 10 percent of an agency's budget. He expounded that the bill asked agencies to identify items that (A) did not serve a current need, (B) were not authorized by the state's constitution, or (C) were non-essential to the agency's mission. He stated that if agencies could not find cuts under items (A) through (C) they were directed to find cuts in low priority services. The amendment specified that the report issued by consultants should identify which of the standards the cuts met. He referred to an opposition argument that the amendment was unnecessary because the report would already recognize which of the standards the proposed cuts met. He countered that it may or may not; the amendment would require it to do so. He emphasized that the amendment would allow the public to see why the cut had been recommended. He added that the amendment would ensure that agencies knew why they had chosen the cuts they had. 1:41:59 PM Representative Wilson expressed opposition to Amendment 1 and noted it had also been heard in a subcommittee meeting. She was concerned that cuts may not always fit into one distinct category. She believed the point of the exercise was to identify proposed cuts based on the language outlined in the bill. She opined that providing further detail on why something had or had not been proposed for cuts could be confusing. Representative Costello spoke against the amendment. She believed that the amendment weakened the legislation's intention to ask some very difficult questions. She stressed that the legislature, departments, agencies, and the public would all be asking tough questions. She was concerned that allowing the "out" would avoid the difficult conversation. She had learned there would be opportunities for public testimony. She stressed that working collectively would help determine ways to move forward in a less certain budget situation. She appreciated the amendment's recognition that the process would not be easy for anyone. 1:44:02 PM Vice-Chair Neuman surmised that the amendment would allow an agency to opt out of recommending 10 percent cuts if it could not meet the criteria under (c)(2)(A). He believed that public notice had been addressed. He pointed to language that had been added in subcommittee (page 2, lines 5 through 8) related to the results of the review and providing information to the Legislative Budget and Audit Committee (LB&A). He stated that the public would be aware of the results when the audit was released. Representative Gara asserted that Amendment 1 was not intended to have the result discussed by Vice-Chair Neuman. He explained that the amendment still required agencies to identify 10 percent cuts. He stated that under the legislation an agency would first look for items outlined in (c)(2)(A) through (C) on page 5; if cuts could not be found under the three categories the agency was required to find other cuts (page 5, lines 9 and 10). He stressed that the amendment would only require the disclosure of where the cuts had come from; the disclosure would enable the public to understand how the cuts had been identified by auditors. He emphasized that the amendment would not change the 10 percent requirement in the legislation. Representative Thompson referred to page 5, lines 20 and 21 and read from the bill: "...including agency mission, results-based measures, prioritization of core services, and all programs within the core services from the most important to the least important." Representative Thompson concluded that the provision requiring the information to be submitted to the legislature [page 5, lines 18 through 21] would likely show where the proposed cuts had come from. Co-Chair Stoltze opined that the amendment provided an "out" because it did not direct agencies to find the 10 percent cuts. He stated that the bill only required agencies to make a recommendation; it did not mandate that the legislature had to follow the recommendations. He saw nothing wrong with asking agencies to designate the cuts and noted that agencies could include a narrative if they believed the cuts were not efficacious. He reiterated that he was uncomfortable giving agencies an out from identifying the cuts. 1:50:20 PM REPRESENTATIVE MIKE CHENAULT, SPONSOR, opposed the amendment. He clarified that the review committee did not make recommendations for agency cuts; departments would make recommendations to the committee. He believed that if department's could not locate the 10 percent cuts they would have the ability to provide a narrative explaining why they believed items were essential to their budget. He understood the concerns, but believed departments would provide commentary on the impact cuts would have on their current budgets. Co-Chair Stoltze remarked that he agreed with the sentiment he had seen on a sign that stated: "if it's in the yellow pages why is government doing it?" Representative Kawasaki voiced support for Amendment 1. He observed that if an agency was not able to make cuts specified in (c)(2) (A) through (C) they would have to justify the remaining cuts. He believed the information would help the review team and the legislature to determine if the cuts were feasible. Representative Gara agreed that Co-Chair Stoltze's concern was valid, but stressed that the amendment did not provide an out to agencies. He clarified that the amendment did not alter the bill's intent; it only had to do with the commentary included in the report. He elaborated that the amendment would require disclosure of where the cuts had come from (either from (c)(2) (A) through (C) or from the lowest priority services in the agency). He emphasized that the amendment would not change the consultants' proposals. He communicated that the amendment's purpose was to provide information to the public. 1:55:36 PM Representative Chenault underscored that the review team would not be responsible for identifying the 10 percent cuts; agencies would be in charge of bringing cuts forward to the review team. Representative Wilson MAINTAINED her OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Gara, Kawasaki OPPOSED: Costello, Edgmon, Holmes, Munoz, Neuman, Thompson, Wilson, Stoltze The MOTION FAILED (8/2). Representative Costello addressed the bill's three fiscal notes. The first was a zero note from the Office of Management and Budget. The second note from the Division of Legislative Audit included $642,300 for three positions in FY 13, zero fiscal impact for FY 14, $1,351,900 for three positions in FY 15, $1,198,900 for three positions in FY 16, $1,324,900 for three positions in FY 17, and $1,177,900 per year for three positions in FY 18 and FY 19. 1:58:35 PM Representative Costello relayed that the last note had zero fiscal impact and was from the Division of Legislative Audit. Co-Chair Stoltze communicated that the fiscal notes had been discussed at the prior meeting. The notes addressed the issue of potential contracting. Vice-Chair Neuman MOVED to report CSHB 30(FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 30(FIN) was REPORTED out of Committee with a "do pass" recommendation and with one new fiscal impact note from Division of Legislative Audit, one new zero fiscal note from Legislative Finance Division, and one new zero fiscal note from the Office of Management and Budget. 1:59:52 PM AT EASE 2:00:27 PM RECONVENED