SB 243 FOUR DAM POOL TRANSFER FUND Co-chair Frank directed that SB 243 be brought on for discussion. MIKE GREANY, Director, Legislative Finance Division, came before committee. He explained that SB 243, sponsored by the Legislative Budget and Audit Committee, contains specific, remedial legislation to respond to a concern that arose in November. One of the elements of energy legislation passed last year abolished the power development revolving loan fund and moved the money to a newly created four-dam-pool transfer fund. The intent was that money from the transfer fund would flow to three receiving funds: 1. Power cost equalization 2. Southeast energy fund 3. Statewide power projects Additional legislation contained a capital appropriation from the Southeast energy fund for a specific intertie. The substantive legislation spoke to flow of money from the four-dam-pool transfer fund to the three receiving funds, "subject to appropriation." No appropriation was subsequently made to get the moneys to the three receiving funds. Legislative Budget and Audit then introduced legislation that deleted "subject to appropriation" language so that the money would automatically flow through a transfer process from the four-dam-pool transfer fund to the receiving funds. Mr. Greany next spoke to the funding of administrative costs from transfer fund moneys. He explained that moneys from the former power development revolving loan fund paid for certain administrative costs in the past. Current legislation does not provide for that. If the desire is to fund a portion of the administrative costs from the four- dam-pool transfer fund or the three receiving funds, legislation so specifying would be needed. Mr. Greany noted an open question, concerning the legislature's power of appropriation, absent specific statutory authority. The clearest approach would be through statute designating how administrative costs will be addressed. RANDY WELKER, Legislative Auditor, added that SB 243 would not preclude the legislature from appropriating operating costs from the subject funds. Senator Sharp directed attention to page 1, line 4, of the bill and noted language allowing for appropriation of administrative costs prior to effecting the 40/40/20 transfer. Mr. Welker concurred and added that there is nothing that would preclude the legislature from making appropriations "out of those receiving funds either." Co-chair Frank voiced a preference for specific language clarifying that administrative costs are to flow from the transfer or receiving funds rather than leaving that issue to the budget process. He then requested that staff work on a proposed amendment to the bill to accomplish that end. Bruce Geraghty said the department views SB 243 as technical in nature. He cautioned against narrowing the approach to funding energy operations. Co-chair Frank asked how the department would respond should the legislature disallow general fund increases. Mr. Geraghty noted that the Alaska Energy Authority budget for FY 94 totaled $8.4 million. That has been reduced to $3.9. The division is making an effort to return several million dollars to the general fund. He next spoke to continuing transfer of moneys and functions from the Dept. of Commerce and Economic Development to Dept. of Community and Regional Affairs. Mr. Greany explained that the legislature has the ability to appropriate at any of the steps along the way. It would be clearer to specify at which point in the process administrative costs should be addressed: 1. Before distribution to receiving funds. 2. As part of the receiving funds on a prorated percentage. Co-chair Frank advised that the issue would be further considered and brought back for discussion at a later time. He then directed that SB 243 be HELD in committee.