HB 100 - APPROP: FY 96 OPERATING & LOAN BUDGET The subcommittee budget for the Dept. of Labor was moved and adopted. Amendments 2 through 97 and front sections of the budget were reviewed and acted upon, and funding for the Alaska Tourism Marketing Council, the Alaska Seafood Marketing Institute, Senior Citizen and Disabled Veteran Tax Relief, Revenue Sharing, Municipal Assistance, Adult Public Assistance, and Aide to Families with Dependent Children was adopted. The bill was then held in committee for concluding action at the next meeting. Upon convening the meeting, Co-chairman Frank referenced open areas of the budget consisting of Dept. of Labor, Senior Citizen and Disabled Veteran Tax Exemptions, Municipal Assistance, Revenue Sharing, Alaska Tourism Marketing, Alaska Seafood Marketing Institute, AFDC, APA, Front Sections, and amendments. He then suggested that discussion proceed to review of numbered Amendments contained within committee packets. [Copies of Amendments 1 through 97 are appended to these minutes.] AMENDMENT NO. 1 Co-chairman Frank noted that the amendment for the Alaska State Council on the Arts was technical in nature and adopted at the April 11, 1995, meeting. AMENDMENT NO. 2 Senator Sharp explained that the amendment for the Division of Investments within the Dept. of Commerce and Economic Development is non-general fund and effects small changes in "where the funds would be coming from." No objection having been raised, Amendment No. 2 was ADOPTED. AMENDMENT NO. 3 Senator Donley said that the amendment contains intent language asking that by December 30, 1995, the Alaska Seafood Marketing Institute relocate within Alaska all employees currently located out of state and that the decrement in personal services be taken from the Bellevue Office. The foregoing requests reflect things the subcommittee intended to do but "didn't quite get into the intent language." He then MOVED for adoption of the amendment. In response to a question from Senator Zharoff, Senator Donley explained that the subcommittee took a $200.0 decrement in personnel services. It was to be taken from non-Alaskan employees. Senator Zharoff asked if funding for the Bellevue office derives from the general fund or industry assessments. He also asked if it was necessary for the office to be located in Bellevue. Senator Donley said he posed that question several times and came to the conclusion that marketing efforts could be conducted from Alaska. Senator Zharoff advised he had prepared an amendment to restore the deleted funds and continue the marketing effort. He explained that most of the funding represents program receipts from the industry for domestic marketing. Comments by Senator Zharoff followed regarding increased assessments on the industry as well as the increase in board membership to twenty-five. He said he did not disagree that employees should be located in Alaska but stressed that the state has made "some tremendous strides in the marketing effort of our Alaskan seafood . . . on the domestic level." A decrement at this time could stall that effort. He further attested to problems associated with attempts to conduct all marketing from within Alaska. Senator Sharp advised that all members of the subcommittee recommended the proposed language. He noted that half of ASMI's employees are now located in Bellevue, and half of the dollars are located there. Senator Donley added that without the intent, there is danger that the reduction will be taken against Alaskan rather than out-of-state employees. Senator Zharoff concurred in need for Alaska hire but again inquired concerning the impact upon marketing efforts. ANNALEE McCONNELL, Director, Office of Management and Budget, came before committee. She advised that the decrement in program receipt authority is separate from the amount "that's relative to the Bellevue office." She declined to become involved in the issue of location of the out-of-state office. Co-chairman Frank called for a show of hand on the motion for adoption. Amendment No. 3 was ADOPTED on a vote of 6 to 1. [See pages 55 and 56 for further discussion of ASMI funding.] AMENDMENT NO. 4 Co-chairman Frank advised that the amendment relates to Senior Citizen and Disabled Veteran Tax Relief and would fund the Homeowners' Property Tax Exemption at $1,163,800 and the Renters' Equivalency Rebate at $336,200. It would also fund State Revenue Sharing at $26,836,600 and Municipal Assistance at $32,646,200. Co-chairman Halford MOVED for adoption. Co-chairman Frank explained that tax relief for senior citizens and veterans is funded at a total of $1.5 million, the same as last year. Funding for municipal assistance and revenue sharing reflects a 5% reduction. Senator Phillips MOVED to divide the question between tax relief and municipal assistance. Co-chairman Frank noted an error in the proposed amendment in that amounts shown for deletion under revenue sharing and municipal assistance should be zero since that Senate budget, at this point, contains no funding. Amounts shown for deletion are House figures, a 10% reduction. Co-chairman Frank called for objections to proposed funding for senior citizen and veteran tax relief at the FY 95 level. In response to an inquiry from Senator Zharoff, Annalee McConnell advised that proposed funding of $1.5 million is the same amount requested by the administration. Upon a show of hands, funding for senior citizen and veteran tax relief was unanimously ADOPTED. Senator Phillips expressed a preference for funding municipal assistance and revenue sharing at the FY 95 level. Senator Zharoff inquired concerning the amount involved in the proposed 5% reduction. Annalee McConnell advised that the administration suggested a 1.7% reduction from FY 95. Senator Zharoff asked what impact the Senate reduction would have upon municipalities. Ms. McConnell said that for communities receiving minimum entitlement, funding would not change. The reduction would "drop the amount for the larger communities--anybody over the minimum entitlement." Larger communities rely more heavily on municipal assistance and revenue sharing. The largest impact in actual dollars would be upon Anchorage, Fairbanks, Juneau, etc. The difference between the reduction anticipated by the administration and that proposed by the Senate would "a little bit more than double the amount of reduction that those communities were expecting to take." Senator Phillips advised that his opposition to the proposed amendment, as well as funding suggested by both the administration and the house, stems from the fact that other formula fundings have not felt the same reduction as municipal revenue sharing. Ms. McConnell acknowledged a 55% reduction "from the high point." Senator Phillips MOVED to amend the proposed amendment and provide revenue sharing of $28,249.1 and municipal assistance of $34,364.4. That would fund both components at the FY 95 level. Co-chairman Frank voiced his OBJECTION. Senator Donley concurred in the foregoing comments by Senator Phillips and noted the chain reaction in municipal budgets created by the cut, voicing particular concern that commensurate cuts would be taken in the education budget for Anchorage. He then voiced support for the amendment to the amendment. Senator Sharp stressed that the budgeting approach was to look back to what the state did not have prior to 1980. Revenue sharing and municipal assistance were not part of the budget process in 1977-78. He suggested that if the legislature is going to make reductions "You've got to look at the big ones." Senator Zharoff voiced his recollection that prior to state provision of municipal revenue sharing, moneys flowed to municipalities from the federal government. Co-chairman Frank called for a show of hands on the amendment to the amendment. The motion FAILED on a vote of 3 to 4. Senator Zharoff MOVED for adoption of an amendment to the amendment which would provide funding for revenue sharing and municipal assistance at the 1.7% reduction suggested by the administration. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 2 to 5. Senator Rieger asked if allocation of funds is prescribed in statute or administered by regulation when funding is less than the entitlement. Ms. McConnell explained that the minimum entitlement for small communities is set in statutes. The formula method is partially established in statute with the remainder set in regulations. The administration does not have discretion as to how it allocates the money. Further discussion followed concerning Senator Rieger's recollection that short funding would be allocated prorata across all communities. REMOND HENDERSON, Division of Administrative Services, Dept. of Community and Regional Affairs, spoke to distribution of minimum entitlement funds and the formula involved in providing additional funds. Senator Zharoff expressed concern on behalf of Alaska's smaller communities. Senator Phillips reiterated need to examine other state formula programs for reductions. He stressed need for FY 95 level funding and voiced opposition to the amendment. Co-chairman Frank called for a show of hands on the main amendment to fund municipal revenue sharing at a 5% reduction. The motion CARRIED on a vote of 4 to 3, and the second half of Amendment No. 4 was ADOPTED. AMENDMENT NO. 5 Co-chairman Halford MOVED for adoption of proposed funding for Aide to Families with Dependent Children and Adult Public Assistance. Co-chairman Frank explained that funding is consistent with SB 98. It reflects a $6.8 million reduction from the Governor's request. Senator Zharoff inquired regarding the impact. Ms. McConnell voiced opposition to reductions in AFDC payments, saying that the best way to achieve welfare reform is to move individuals into training and subsequent jobs. She asked if Senate funding is intended to match proposed House action to cut the ratable 7%. She further spoke to methods of cutting welfare, stressing the importance of job training. KAREN PERDUE, Commissioner, Dept. of Health and Social Services, came before committee. She voiced her assumption that proposed funding would precede passage of a statutory amendment to effect a ratable reduction. The ratable reduction would be the largest reduction "ever accomplished on the AFDC program" and would equate to a $69.00 monthly reduction to each of the 14,000 families on AFDC. Co- chairman Halford asked how the amendment would compare with proposed federal reductions in AFDC. Ms. Perdue said that "If we did no aggressive welfare reform changes," there would be a reduction in benefits that would be near this amount. If the state changed eligibility requirements for the program, the money would be spread differently. Co-chairman Frank advised that proposed funding for Adult Public Assistance is at the level requested by the Governor. In response to a question from Senator Donley regarding the $125.0 in general funds to be deleted, Co-chairman Frank explained that the reduction is not associated with entitlements. It relates to an administrative reduction. Commissioner Perdue said that the number matches the subcommittee reduction in the interim assistance program, offset by a $50.0 increment to assist with legal costs in helping individuals become "SSI determined." Co-chairman Frank directed that the meeting be briefly recessed. RECESS - 1:05 P.M. RECONVENE - 1:40 P.M. Upon reconvening the meeting, Co-chairman Frank directed attention to a revised version of Amendment No. 5. End: SFC-95, #31, Side 1 Begin: SFC-95, #31, Side 2 He then noted need to correct amounts set forth on the revised version to reflect $55,807.2 in federal funds; $55,807.2 in general funds; and $11,610.7 in other moneys. Commissioner Perdue explained that proposed funding would cut AFDC payments by 7%, the maximum federal amount, resulting in a reduction of $69.00 a month. A statutory change would be needed to implement the reduction. Payment will not be cut unless a statutory change is made. Proposed funding sets the department up for a supplemental should the Governor veto a statutory change. Ms. McConnell emphasized that the Governor has gone on record saying he does not support a reduction in the ratables. Payments are a legal entitlement. Without a change in the statute, the administration has no choice but to comply with the statute and make payments as required. The administration has active plans for welfare reform, but ratable reduction is not one of them. Commissioner Perdue advised that the Senate proposal reflects a policy change as well as a budgetary change. She suggested that the issue should be debated in the context of a fiscal note rather than within the budget. Ms. McConnell referenced the House approach which effects the statutory change in legislation accompanied by a fiscal note reducing funding. She urged that the Senate do the same. In response to a question from Senator Sharp seeking a comparison of proposed funding with that for FY 95, NANCY SLAGLE, Director of Budget Review, Office of Management and Budget, explained that the amount the administration requested for FY 96 is less than 95. The Governor's general fund request is $58,906.0. The amount for FY 95 was $61,435.0. The Senator then asked if any of the funds lapsed. Ms. Slagle acknowledged that some were offered as a reduction in the supplemental. Commissioner Perdue expressed concern regarding a policy change and its impact on Alaskan families. She voiced further concern regarding need for a future supplemental, advising "This is the kind of payment that we really must make." People depend on it for their monthly living expenses. Discussion followed regarding policy provisions within SB 98. Co-chairman Frank called for a show of hands on the motion for adoption. Amendment No. 5 was ADOPTED on a vote of 4 to 2. AMENDMENT NO. 6 Senator Sharp advised that the amendment to insert $163,800 to support a wood bison management and transplanting program within the Wildlife Conservation BRU of the Dept. of Fish and Game budget was ADOPTED at the April 12, 1995, meeting. AMENDMENT NO. 7 Co-chairman Frank explained that the amendment would conform Dept. of Administration, Dept. of Law, Dept. of Labor, Dept. of Natural Resources, Dept. of Fish and Game, Dept. of Public Safety, Dept. of Transportation and Public Facilities, Dept. of Community and Regional Affairs and the University of Alaska budgets to action taken in the Dept. of Environmental Conservation budget regarding response fund administration. Senator Rieger voiced his understanding that the subcommittee for the DEC budget approved the amount of funding to flow from the oil and hazardous substance fund to other departments. Discussion followed between Senator Zharoff and VIRGINIA STONKUS, fiscal analyst, Legislative Finance Division, regarding the impact on the University. MARY LOU BURTON, University of Alaska, concurred in comments that the University has no problem with the proposed adjustment since it relates to a board that is sunsetting. Co-chairman Frank called for objections to adoption of the amendment. No objection having been raised, Amendment No. 7 was ADOPTED. AMENDMENT NO. 8 Co-chairman Halford MOVED for adoption. Co-chairman Frank explained that the amendment would change the reduction in oil and gas development from a specific reduction in presale analysis to a general $100.0 general fund reduction within the $4 million BRU. The intent is to provide greater flexibility. No objection having been raised, Amendment No. 8 was ADOPTED. AMENDMENT NO. 9 Co-chairman Frank explained that the technical amendment establishes the fixed costs component within the fire suppression BRU in a manner which provides more flexibility to the department. Ms. McConnell sought assurance that the intent was clear that costs would be funded through a supplemental. That was the Senate's preference as opposed "to doing it up front in the budget." No objection to adoption having been raised, Amendment No. 9 was ADOPTED. AMENDMENT NO. 10 Senator Sharp MOVED for adoption. Senator Zharoff OBJECTED for the purpose of explanation. Senator Sharp advised that, per the amendment, fish and game funds and federal funds exceeding the amount funded in the budget must be approved by the Legislative Budget and Audit Committee. Ms. McConnell stressed that the department has not needed to go to LBA "for this kind of thing in the past." No objection having been raised, Amendment No. 10 was ADOPTED. AMENDMENT NO. 11 Senator Rieger explained that front section provisions contained within the amendment relating to the Violent Crimes Compensation Board and the Council on Domestic Violence and Sexual Assault comprise the remainder of the subcommittee report for the Dept. of Public Safety budget. Language appropriates twenty-five percent of moneys collected from day fines to compensation of victims of violent crime and twenty-five percent to the Council on Domestic Violence and Sexual Assault. Provisions also extend the lapse date on an FY 95 appropriation to June 30, 1996. Discussion of operations of day fines followed. When queried by Senator Zharoff, representatives of the administration indicated they had no problem with the amendment. No objection having been raised, Amendment No. 11 was ADOPTED. [See subsequent action on Amendment No. 90 (page 65) for technical correction of amendment language.] AMENDMENT NO. 12 Senator Rieger explained that operation of the Sitka Airport remains an unresolved issue in the Dept. of Transportation and Public Facilities budget. He advised of an earlier request for a general fund increment for the airport. The state is now negotiating with the city and borough for an arrangement whereby the city would collect landing fees, contract with the state to operate the airport, and transfer fee receipts to the state for operational costs. Front Section language proposed within Amendment No. 12 is intended to accommodate that negotiation. Annalee McConnell voiced department support for the amendment. RON LIND, Director, Administrative Services, Dept. of Transportation and Public Facilities, came before committee in response to a question from Senator Phillips. He explained that the city of Sitka indicated it was losing $150.0 to $200.0 a year on airport operations. Based on receipts, it would appear the city was spending over $700.0. Senator Rieger explained that while it was somewhat arbitrary, the $500.0 proposed by subcommittee was "intended to give a margin because the earlier referenced general fund request was "only for $410.0." Mr. Lind advised of a corrected amount of $490.0. Senator Rieger suggested that if the proposed appropriation is not sufficient, the department could come to LBA. Mr. Lind advised that the state felt it could operate the airport for $490.0, because it is combined with the highway station at Sitka. Further discussion followed between Mr. Lind and Senator Zharoff regarding the city's notification that it would cancel its operating agreement. Mr. Lind explained that the state-owned airport was thus returned to the state for operation. Alaska Airlines agreed to pay Sitka the amount paid in the past and, in effect, made a grant through Sitka to the state for operation of the airport. The airport is the responsibility of the state and operating costs must be paid. The state is attempting to get the city to take back operation and reinstitute a fee system. It would then be up to the city to decide whether to conduct its own maintenance or contract with the state. Mr. Lind advised, "The state cannot reinstitute a landing fee there without putting the tax that was passed last year in jeopardy." Senator Zharoff asked if a similar process is followed elsewhere. Co-chairman Frank voiced his understanding that "It would be a new little wrinkle . . . ." Further discussion followed concerning the recent tax increase on aviation fuel and an associated prohibition on landing fee increases. Mr. Lind explained that when the seven-tenths of a cent fuel tax increase was enacted last year, it was designed to cover what the state had attempted to implement as landing fees at rural airports. It did not consider Sitka since it was operated by the municipality. The tax increase was accompanied by language saying the tax would be repealed if the state institutes a landing fee at a rural airport by the year 2000. Sitka qualifies as a rural airport under present definitions. Further comments followed by Co-chairman Frank regarding the impact of adoption of the amendment versus failure to do so. The Co-chairman then called for objections to adoption. No objection having been raised, Amendment No. 12 was ADOPTED. AMENDMENT NO. 13 Co-chairman Frank explained that the amendment would replace subcommittee deletion of the assistant state recorder position with a general reduction in the Recorder's Office in the Dept. of Natural Resources budget. Co-chairman Halford MOVED for adoption of the amendment. In response to a question from Senator Zharoff regarding the impact of the change, Co-chairman Frank said it would allow the department to handle the $63.4 reduction in the least objectionable way. Senator Zharoff inquired concerning the effect of the reduction on outlying recording offices. Ms. McConnell said delays in document processing would occur. However, it would be easier to spread the reduction overall rather than target a specific area. The program brings in more receipts than it expends. At the request of Co-chairman Frank, Co-chairman Halford asked that Amendment No. 13 be withdrawn. [See page 13 of these minutes for subsequent adoption of Amendment 13.] AMENDMENT NO. 14 Senator Rieger explained that the amendment is comprised of two parts. The first adds $129.1 in general funds to the Alaska Police Standards Council. The second adds $150.0 to a new BRU entitled, "Dalton Highway Protection." The Senator advised of a new program receipt funding source from a surcharge on citations to help fund the program. The original subcommittee recommendation was to zero the general funds and make the program totally self-supporting from program receipts. Timing of the program receipts does not commence until January. The $129.1 represents half-year funding to cover July through December. Speaking to the second portion of the amendment, Senator Rieger noted passage of legislation to open the highway and a revised fiscal note of $660.0 for protection. The $150.0 in the amendment reflects "all the money that was left under the cap to put in there." Co-chairman Frank said that when the highway was opened, he intended to provide funding for seasonal fish and wildlife protection. While the above amount does not provide the $660.0 sought by the department, it provides something. Senator Zharoff concurred in need for protection along the highway during the time it is most heavily used. Senator Donley inquired concerning use of the $129.1 for the Alaska Police Standards Council. LADDIE SHAW, Executive Director, Alaska Police Standards Council, Dept. of Public Safety, advised that it would cover administration of the Council. Annalee McConnell added that program receipts cover training for municipal police officers and correctional officers. Co-chairman Frank called for objections to adoption of the amendment. No objection having been raised, Amendment No. 14 was ADOPTED. AMENDMENT NO. 15 Co-chairman Frank noted that Amendment 15, which makes an unallocated reduction of $1,385.9 to all components in the Dept. of Transportation and Public Facilities budget (with the exception of Marine Highways) and an unallocated $390.6 reduction to the Marine Highway Stabilization Fund, was previously ADOPTED. AMENDMENT NO. 16 Co-chairman Halford explained that the amendment transfers $26.0 from general fund match to general funds within the General Relief Medical component in the Dept. of Health and Social Services budget. The net result is zero. Co- chairman Frank called for objections. No objection having been raised, Amendment No. 16 was ADOPTED. AMENDMENT NO. 17 Co-chairman Frank advised that the amendment makes appropriation of $437,000 for Community Jails contingent upon contractual extension of rates for the next three years. End: SFC-95, #31, Side 2 Begin: SFC-95, #37, Side 1 The Co-chairman advised that FY 96 funding provides the remaining half of an increment. Yet unfunded is the request for the FY 95 supplemental. Ms. McConnell cautioned that proposed funding does not take care of problems with existing contracts for FY 95. It fully funds contracts negotiated for FY 96 and carries that amount level for three years. Contact with communities indicated interest in this type of approach. Co-chairman Frank called for objections to the amendment. No objection having been raised, Amendment No. 17 was ADOPTED. [NOTE - See April 20, 1995, minutes for subsequent language change of "may" to "shall" within the amendment.] AMENDMENT NO. 18 Co-chairman Frank advised that there is no Amendment No. 18. AMENDMENT NO. 19 Senator Phillips acknowledged concern by members regarding OSHA funding. The proposed amendment provides an additional $30.0 for Occupational Safety and Health in the Dept. of Labor budget. The budget would remain below the cap even with the addition. Ms. McConnell advised of $276.0 in the FY 95 budget for compliance and other problems not covered by federal statutes. The subcommittee zeroed that amount. The impact of that action will mean that inspectors in the field will only deal with "things that could be charged for federal statutes but would leave uncovered a number of state statutes . . . ." The $30.0 would provide little ability to deal with enforcement of state law. She urged consideration of a higher number. A staff equivalency of 9.5 presently covers compliance with and violations of state law. Senator Phillips MOVED for adoption of the amendment. No objection having been raised, Amendment No. 19 was ADOPTED. AMENDMENT NO. 20 Co-chairman Frank advised that he would withdraw Amendment 20 relating to community jails. AMENDMENT NO. 21 Co-chairman Frank said that the amendment would return the Agriculture Development component to a separate Agricultural Development BRU. It contains no change in funding. In response to a question from Senator Donley, the Co-chairman explained that the House budget moved the component into the development BRU. Co-chairman Frank called for objections. Senator Donley OBJECTED, stressing need for flexibility in spreading reductions. Placing agricultural development in a separate BRU restricts that capability. Co-chairman Frank called for a show of hands. The motion CARRIED on a vote of 5 to 2, and Amendment No. 21 was ADOPTED. Senator Zharoff requested a brief recess. RECESS - 2:35 P.M. RECONVENE - 2:55 P.M. AMENDMENT NO. 13 Upon reconvening the meeting, Co-chairman Frank directed attention to Amendment No. 13 which he advised would replace deletion of the assistant state recorder in the Recorder's Office in the Dept. of Natural Resources with a general reduction. Senator Zharoff advised that his amendment (Amendment No. 55) was similar. He said that following discussion of Amendment No. 13, earlier in the meeting, he received further clarification of the issue and therefore had no objection to adoption. Co-chairman Halford MOVED for adoption of Amendment No. 13. No objection having been raised, the amendment was ADOPTED. AMENDMENT NO. 22 Co-chairman Frank asked that consideration of Amendment No. 22, relating to additional funding for Fair Business Practices, Environmental Law, and Operations within the Dept. of Law be held for later action. [See pages 50, 54-55 for subsequent action.] AMENDMENT NO. 23 Senator Zharoff explained that the amendment would add $146.9 to the Public Broadcasting Commission, for support services, and $280.0 for the Southeast Alaska Microwave. He then MOVED for adoption. Senator Phillips OBJECTED. MARK BADGER, Director, Division of Information Services, Dept. of Administration, and DOUGLAS SAMIMI-MOORE, Executive Director, Public Broadcasting Commission, Dept. of Administration, came before committee. Mr. Moore explained that the Senate appropriation provides for no support staff. It strictly funds grants. The amendment would provide for personal services, travel, contractual, and commodities funding for commission staff. The $280.0 for the Southeast Alaska Microwave would allow for continued service to Sitka, Wrangell, Petersburg, Ketchikan, Angoon, Kake, and Metlakatla. Without the addition, the communities will no longer receive KTOO transmission. Senator Phillips stressed that funding recommended by the subcommittee met the Senate cap. It provides $4.4 million for public broadcasting. That is 75% more than allowed by the House. Senator Zharoff noted that since presentation of subcommittee recommendations, the commission has had an opportunity to evaluate funding in terms of impact. He said he was now attempting to bring impact concerns before committee for correction. Co-chairman Frank advised that he had not understood that Senate reductions would result in discontinuation of service in Southeast. Senator Phillips advised that the subcommittee budget allows for radio coverage to communities. He questioned whether television is really a function of government. In response to a question from Senator Donley, Mr. Moore voiced his understanding that the $1.4 million provided in the Senate budget includes both public television and RATNET. It will not be possible to fund $280.0 for the microwave within that amount. Annalee McConnell advised that if the administration ends up in a situation with House and Senate numbers as they currently stand, and the conference committee accepts both numbers and associated line items, the merger proposal can work. The piece that would allow the signal to be digitized is in the capital budget. That would be needed to serve the above-noted communities. Mr. Moore added that provision of all three fundings would also reduce operating costs for RATNET and public television. Discussion followed between Mr. Moore and Co-chairman Frank regarding capital budget funding. Senator Donley noted that the proposed amendment is merely a piece of what is needed. He advised that he would later offer an amendment to cover total need. Co-chairman Frank called for a show of hands on adoption of Amendment No. 23. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 24 Senator Zharoff explained that the amendment would add $1.1 million for RATNET. He then MOVED for adoption. Co- chairman Halford OBJECTED. MARK BADGER, Director, Division of Information Services, Dept. of Administration, again came before committee. He explained that the $1.1 million would allow for transition from the current method of delivering rural Alaska television to a hybrid of pubic broadcasting and rural television signals. It would also fund the RATNET council, which has been unable to meet because of lack of moneys. In response to a question from Senator Zharoff, Mr. Badger acknowledged that RATNET technology is outdated. Senator Zharoff advised that most communities pay maintenance costs at the local level. He suggested that the statewide impact of RATNET on behalf of businesses in Anchorage is noticeable. In addition to news and other services, it also provides a vehicle for advertising. FORMER LT. GOVERNOR RED BOUCHER next came before committee. He explained that on the first of June, AT&T will take over Alascom. The new corporation will be watching to determine how much the state cares about the existing communication structure to determine what investments it will make in Alaska. With development of new worldwide telecommunication technologies, Alaska has an infrastructure that can be used for medicine, economics, education, etc. Telecommunication systems could play a significant role in economic development of rural Alaska. Those involved in public broadcasting, RATNET, and eduction have decided to consolidate efforts. Public broadcasting and RATNET have a program that will work. It should be favorably reviewed in the name of economic development. As background information, Former Lt. Governor Boucher submitted a 1990 study resulting from a joint bipartisan effort. Co-chairman Frank asked that Amendment No. 24 be held pending review of Senator Donley's amendment. [See pages 42 and 43 of these minutes for action on Amendment No. 24.] AMENDMENT NO. 25 Senator Zharoff withdrew the amendment, indicating that community jails had previously been dealt with. [Amendment No. 17, pages 11-12.] AMENDMENT NO. 26 Senator Zharoff MOVED for adoption of the amendment to restore $108.6 to Community Corrections, Northern Region Probation, within the Dept. of Corrections. He advised that funding would provide for an additional probation officer to handle increased caseloads in the Fairbanks Regional Office. It would also provide clerical assistance and support to the position. Without the funding, the office will be unable to provide proper supervision of all offenders. MARGARET PUGH, Commissioner, Dept. of Corrections, came before committee. She advised that the Fairbanks Regional Office includes the Bethel area. Funding would cover a probation officer and part-time clerk. The officer would be located in Bethel. The addition would also provide for emergency locator beacons for snow machine travel. Discussion of the presentence backlog at Bethel followed between Senator Donley and Commissioner Pugh. Senator Donley voiced his understanding that probation offices are so understaffed that officers are unable to visit homes to ensure that releasees are complying with the terms of probation and the public is adequately protected. Commissioner Pugh acknowledged that as attention focused on overcrowding in the prison system, an equal amount of attention was not given to growing caseloads in probation and parole. Senator Donley attested to a severe lack of resources and inability of parole officers to do their jobs. It is important to both victims of crime and the public, in general, that adequate supervision be in place. Senator Rieger asked if the department favors a probation fee. Commissioner Pugh voiced her understanding that a former probation fee statute was repealed because the cost of collection exceeded revenues, particularly in Northern and Southcentral regions. Senator Sharp concurred in concerns expressed by Senator Donley regarding public safety. He then advised of his belief that problems with the division are internal. He stated that "They've successfully run off five of their most senior probation officers," one via transfer to Barrow and another to a desk job at a state jail. Of the remaining officers who left the division, one had received outstanding commendations from both the legislature and the U.S. Congress. Senator Zharoff warned that problems stemming from lack of probation resources will not go away. The state will pay for them in one fashion or another. The alternative to additional probational officers is more costly. Co-chairman Frank called for a show of hands on approval of Amendment No. 26. The motion FAILED on a vote of 2 to 4. AMENDMENT NO. 27 Senator Zharoff MOVED for adoption of Amendment No. 27. End: SFC-95, #37, Side 1 Begin: SFC-95, #37, Side 2 Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would return $1.3 million to road maintenance within the Dept. of Transportation and Public Facilities by elimination of the unallocated reduction. Co-chairman Frank voiced his understanding that the $1.3 million would be equally split between roads and the marine highway system. He further advised that the subcommittee budget provides funding at the FY 94 level, denies increments requested by the Governor, and contains a $1.3 million unallocated reduction. In the course of further discussion of past and proposed department funding, Senator Rieger presented the following totals: FY 94 actual $128,025.0 FY 95 authorized $129,114.0 FY 96 Governor's original request $130,119.0 FY 96 Governor's amended $134,478.9 Senate subcommittee budget $128,025.0 Co-chairman Frank noted that the subcommittee budget is $3 million over the cap. Annalee McConnell stressed that the new administration requested additional funding due to concern regarding the deferred maintenance backlog. The Commissioner is working on reducing the per-lane-mile cost of maintenance and achieving significant savings. Large maintenance items total $30 million statewide. Ms. McConnell cautioned that $30 million is not the full amount. She further advised that when supplementals are added to the FY 95 authorized figure, total funding is $132,555.0. Senator Phillips inquired concerning the administration's position on a constitutional amendment for a dedicated gas tax. Ms. McConnell responded that she was unaware of a position. RON LIND, Director, Division of Administrative Services, Dept. of Transportation and Public Facilities, came before committee to speak to the issue. He explained that the current motor fuel tax collects approximately $25 million. It is not dedicated. Co-chairman Frank called for a show of hands on adoption of Amendment No. 27. The motion FAILED on a vote of 1 to 6 (Senator Donley did not appear to vote.) AMENDMENT NO. 28 Senator Zharoff explained that Amendment No. 28 would add $361.0 for the Alaska Legal Services Corporation in the Dept. of Community and Regional Affairs. Funding for FY 95 was $361.0. The Governor requested $421.0 for FY 96. The House provided $261.0, and the Senate subcommittee provided no funding. The Senator attested to loss of the legal services office at Kodiak and advised of two or three others destined to close. Annalee McConnell noted that House funding would necessitate closure of the Kotzebue office and reduction of the office at Nome. REMOND HENDERSON, Director, Division of Administrative Services, Dept. of Community and Regional Affairs, came before committee in response to questions from members. He advised of legal services offices in Anchorage, Bethel, Barrow, Fairbanks, Juneau, Kotzebue, and Nome. The Kodiak and Dillingham sites were closed. These nonprofit offices receive federal, state, and local contributions. Senator Phillips noted that state funding was not provided until 1981. The Dept. of Community and Regional Affairs subcommittee used criteria which measured programs in terms of whether they were constitutionally or statutorily mandated and in existence before 1977 (before oil). Legal services did not meet the criteria. In making a choice between it and Headstart, the subcommittee opted to fund Headstart. Co-chairman Frank called for a show of hands on adoption of Amendment No. 28. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 29 Senator Zharoff MOVED for adoption of Amendment No. 29. Co- chairman Halford and Senator Sharp OBJECTED. Senator Zharoff explained that the FY 95 budget for the waiver services component within the medical assistance BRU of the Dept. of Health and Social Services totaled $8,881.5. The Governor requested $13.6 million. Both the House and Senate provided $11,248.0. Funding relates to clients who receive Medicaid for home and community-based services. There are approximately 295 new requests. Legislative funding allows for only half. The waiver program prevents individuals from being institutionalized and saves 50% of Medicaid costs. Annalee McConnell concurred that the department could fill all 295 spots. She stressed that the program is a cost avoidance mechanism for reducing institutional costs. Senator Rieger asked if the department would favor transfer of requested funding from Medicaid facilities to Medicaid waiver services. KAREN PERDUE, Commissioner, Dept. of Health and Social Services, again came before committee. She explained that, due to operation of the rate-setting system, it is not possible to effect a person-by-person transfer. Facilities continue to have certain fixed costs even when the population is reduced. Discussion of costs at Medicaid facilities followed. Co-chairman Halford voiced support for the waiver program. He noted that Senate funding is higher than that provided by the House but not as high as the Governor requested. The Dept. of Health and Social Services subcommittee budget "came in about $15 million above the cap." That provides funding well above last year. Discussion followed regarding the Harborview facility. Commissioner Purdue advised of 28 residents who might benefit from waiver services. Further discussion ensued relating to the phase-out of Harborview and the fact that Alaska has one of the largest and fastest growing elderly populations in the United States. Co-chairman Frank called for a show of hands on adoption of Amendment No. 29. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 30 Senator Zharoff MOVED for adoption of Amendment No. 30. Co- chairman Halford OBJECTED. Senator Zharoff explained that the amendment would provide an additional $2,000.0 in general funds and a like amount in federal funds to restore funding for seven services on the Medicaid options list. He then recited a listing of those services. He referenced the case of an elderly woman in a remote community within his district who could afford neither the hearing aid or eye glasses she needed. Co-chairman Halford acknowledged that the amendment would restore services previously dropped from the option list. He said that if the subcommittee could possibly have restored options and remained within the $15 million over cap, it would have done so. That was not possible. Without cost containment, this area would be growing at a rate of over 20% per year. Both House and Senate budgets maintain exactly the same Medicaid services as last year. No cut was made. Commissioner Perdue again came before committee to speak to the numbers of individuals aided by Medicaid options that are no longer available. Senator Donley MOVED to amend Amendment No. 30 and utilize funding from the underground storage tank program as the source of the $2 million addition to Medicaid non-facility. Discussion of the source of the program receipts within the storage tank fund followed. Co-chairman Frank called for a show of hands on the amendment to Amendment No. 30. The motion FAILED on a vote of 1 to 6. Senator Donley MOVED to amend Amendment No. 30 and utilize the agricultural loan program as the source of funding. Co- chairman Frank called for a show of hands on the amendment to Amendment No. 30. The motion FAILED on a vote of 1 to 6. Co-chairman Frank called for a show of hands on the main motion for adoption of Amendment No. 30. The motion FAILED on a vote of 2 to 5. Co-chairman Frank directed that the meeting be briefly recessed. RECESS - 4:05 P.M. RECONVENE - 4:20 P.M. Upon reconvening the meeting, Co-chairman Frank announced that Amendments 31, 32, 33, 34, and 35, relating to the Dept. of Fish and Game, would be HELD for later discussion. Senator Zharoff so MOVED. [See pages 50-53 of these minutes for action on the amendments.] AMENDMENT NO. 72 Senator Sharp explained that Amendment No. 72 would restore recommended funding of $225.0 from fish and game funds to the species management component in the wildlife conservation BRU of the Dept. of Fish and Game budget. Co- chairman Frank called for objections. No objection having been raised, Amendment No. 72 was ADOPTED. AMENDMENT NO. 36 Senator Zharoff explained that the amendment would add $600.0 in general fund program receipts to the solid and hazardous waste management component in the Dept. of Environmental Conservation budget. Restoration would allow for development of a solid waste permitting program to avoid implementation of federal regulations. Inclusion would increase Senate funding over the amount provided by the House. Annalee McConnell concurred that the House effected a $200.0 cut. GENE BURDEN, Commissioner, Dept. of Environmental Conservation, came before committee. He explained that the $600.0 in program receipts would be generated by fees from municipal disposal sites and costs associated with closeout of "drilling mud pits" on the North Slope, Kenai Peninsula, and other locations. Co-chairman Frank explained that the subcommittee asked that the department reassess programs for both solid waste and air quality in an effort to reduce both programs. Intent language provides the department an opportunity to come to LBA to receive and expend "these funds." He advised that the legislature wants the state to maintain primacy. Subcommittee funding is intended to do that with the least amount possible so that fees will be the least onerous. He acknowledged that fees will be higher if the federal government takes over. Discussion followed regarding the source of fees. Co- chairman Frank acknowledged need to see and review a list of communities and fees paid for approval of dump sites. [The following portion of the meeting was not recorded. Minutes reflect transcription of shorthand notes.] Commissioner Burden expressed concern that lack of sufficient funding may cause delay in getting the air quality program started. He expressed further concern regarding problems in obtaining program receipt approval through the Legislative Budget and Audit Committee. Co-chairman Frank called for a show of hands on adoption of Amendment No. 36. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 37 Senator Zharoff MOVED for adoption of Amendment No. 37. Co- chairmen Frank and Halford OBJECTED. Co-chairman Frank spoke in opposition to the $1.1 million addition in general fund program receipts to the air quality management component in the Dept. of Environmental Conservation budget, reiterating remarks made in connection with Amendment No. 36. He then called for a show of hands on the motion. The motion FAILED on a vote of 2 to 5. End: SFC-95, #37, Side 2 Begin: SFC-95, #39, Side 1 [The following minutes reflect transcription of the tape- recorded meeting.] AMENDMENT NO. 74 Senator Donley MOVED for adoption of Amendment No. 74. Senator Sharp OBJECTED. Senator Donley voiced his belief that funding the air quality management component in the Dept. of Environmental Conservation budget at $5,871.4 represents a higher priority than funding for the storage tank assistance fund. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 1 to 5. (Senator Zharoff did not appear to vote.) [See also, p. 43.] AMENDMENT NO. 38 Senator Zharoff MOVED for adoption of Amendment No. 38. Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would restore $200.0 in general fund program receipts removed from the personal services line in the Seattle Alaska Seafood Marketing Institute office of the Dept. of Commerce and Economic Development budget. He voiced support for both Alaska hire and location of staff in Alaska. He further voiced his understanding that in-state location had been tried, and need for out-of-state staff gravitated positions to Seattle. A move at this time could have a negative impact on marketing. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 39 Senator Zharoff MOVED for adoption of Amendment No. 39. Co- chairman Halford OBJECTED. Senator Zharoff explained that the amendment would restore the $200.0 general fund match for the Alaska Seafood Marketing Institute. The institute may be able to receive an additional $1 million in federal funds through use of match moneys. Senator Sharp acknowledged the potential match but explained that institute staff advised of past overestimates. Subcommittee funding merely lowered the match to what staff indicated federal funds might be. Intent language specifies that if additional federal moneys are forthcoming, the institute may go before Legislative Budget and Audit and "get a pass through." GUY BELL, Director, Administrative Services, Dept. of Commerce and Economic Development, acknowledged the uncertainty of federal moneys flowing to ASMI. At the current funding level, the institute has "sufficient minimum level match for about a $6 million federal grant, which is about what is anticipated." Mr. Bell further acknowledged institute concern regarding the signal reduced match funding sends to the federal government. The federal government likes to see a larger than minimum match put forth by the institute. Senator Zharoff cautioned against sending that message. Co-chairman Halford asked if language could be included within the budget to "put in the availability of match that is clearly contingent on actual receipt of the federal funds." There would then be no loss but also no potential use of the funds other than for a federal match. Mr. Bell voiced his belief that the foregoing could occur in a restricted, separate, front section appropriation. Senator Sharp asked if program receipts could provide the match. Mr. Bell voiced his understanding that past match moneys have come from the general fund. He advised of two or three program receipt assessments on processors and fishermen, collected by the state on behalf of ASMI. The assessment on fishermen is required to be used for domestic salmon marketing. It could thus not be used for foreign marketing--the thrust of the federal receipts. The assessment on processors is also used exclusively for domestic marketing. Mr. Bell deferred comment on whether it could be used for foreign marketing to staff from the institute. ART SCHHEUNEMANN, Executive Director, Alaska Seafood Marketing Institute, Dept. of Commerce and Economic Development, came before committee. He explained that the board would decide whether or not to direct funds to matching purposes. Senator Zharoff asked if new language and an appropriation in the front section of the budget would be necessary. Co- chairman Frank asked that Amendments 39 through 41 be HELD pending receipt of an answer to the question. [See pages 55- 56 for action on Amendments 39 through 41.] AMENDMENT NO. 42 Senator Zharoff MOVED for adoption of Amendment No. 42 which would add intent language requiring relocation of all out- of-state Alaska Seafood Marketing Institute employees within Alaska by December 30, 1995. Senator Sharp OBJECTED. Senator Rieger suggested that as the program becomes increasingly self-supporting it is not appropriate for the legislature to "call the shots in this much detail." Senator Zharoff acknowledged that he did not know what impact relocation might have upon marketing efforts and suggested amending the intent to require relocation by June 30, 1996. That would provide opportunity for review during the 1996 session. Senator Rieger suggested that more detailed analysis could occur if a request for additional program receipts is made through the RPL process to the Legislative Budget and Audit Committee. Senator Zharoff questioned whether LBA would have authority to delay relocation should it appear prudent. Further discussion followed regarding whether the date should be December or June. Co-chairman Frank called for a show of hands on Amendment No. 42. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 87 Senator Sharp MOVED for adoption of Amendment No. 87. He explained that it would restore $1 million to commercial fisheries, regional and statewide administration, in the Dept. of Fish and Game budget. Senator Donley OBJECTED, asking how the addition would fit within the cap. Co- chairman Frank advised that it would go beyond the cap. Senator Donley referenced lack of willingness to add funding to public protection programs such as occupational safety and probation due to need to remain within caps. He then questioned the priority, fairness, and lack of consistency associated with the proposed addition. Co-chairman Halford noted a reduction of over $5 million in the Dept. of Fish and Game budget. Restoration of $1 million to commercial fisheries does not achieve last year's spending level. The commercial fishery is a generator of revenue in terms of employment, payroll, and economic activity. Senator Sharp added that, with the increase, commercial fisheries funding remains $789.5 below that of FY 95. FRANK RUE, Commissioner, Dept. of Fish and Game came before committee and cited areas within commercial fisheries that would be cut under the Senate budget. Further discussion followed between Co-chairman Frank and GERON BRUCE, Legislative Liaison, Dept. of Fish and Game, regarding raw fish tax receipts. Additional discussion ensued concerning whether the cost of commercial fisheries management is offset by jobs, revenues, and economic activity. Annalee McConnell stressed that Alaska fisheries are priorities in administrative attempts to diversify the state economy and promote greater economic development and jobs. Senator Donley stressed that lack of funding for enforcement of work place safety presents a "real endangerment to private enterprise in this state." The only justification for not providing adequate funding has been an artificial cap. He again questioned funding priorities. Co-chairman Halford reiterated that the $27 million commercial fishery budget generates approximately $100 million in revenue. As an employer, it ranks with tourism and oil and gas in terms of the number of jobs and the payroll that flows to the private sector. Senator Phillips concurred in Senator Donley's argument regarding priorities and asked if the $1 million could be taken from another area of the budget. Senator Zharoff stressed need for adequate funding in commercial fisheries, advising that it impacts commercial fishermen, sport fishermen, personal-use fishermen, and subsistence. It also impacts the resource. He attested to need for an adequate assessment mechanism for managing openings and closings, apportioning the resource among user groups, and generating statistics for international negotiations. Senator Phillips advised that resource protection is one of the highest priorities of his constituents. He nonetheless expressed reluctance to exceed the established cap and advised that he would vote against the proposed amendment unless the $1 million addition could be taken from elsewhere in the budget. Senator Sharp stressed that the division of commercial fisheries represents the only division that has been successful in managing for abundance. Co-chairman Frank asked that the amendment be temporarily withdrawn, saying that the committee would return to it at a later time. Senator Sharp MOVED to temporarily withdraw Amendment No. 87. Co-chairman Frank directed that the meeting be briefly recessed. [See below for subsequent action.] RECESS - 5:10 P.M. RECONVENE - 5:45 P.M. AMENDMENT NO. 87 Upon reconvening the meeting, Co-chairman Frank directed that Amendment No. 87 again be brought on for consideration. He then called for objections to addition of $1 million for commercial fisheries. Senator Phillips OBJECTED. Co- chairman Frank called for a show of hands. Amendment No. 87 was ADOPTED on a vote of 6 to 1. AMENDMENT NO. 43 Senator Zharoff MOVED for adoption of Amendment No. 43. Co- chairman Halford and Senator Sharp OBJECTED. Senator Zharoff explained that addition of $400.0 to economic development in the Dept. of Commerce and Economic Development budget would restore funding to the Governor's amended level. Funding pertains to Alaska Regional Development Organizations (ARDORS). The subcommittee decrease represents 45% of the funding and will have severe negative impacts on economic development. The ARDOR program provides a statewide forum for networking that strengthens less developed regions and bridges rural and urban interests. Annalee McConnell advised of the administrative focus on economic development and suggested that investment would be evidenced in increased jobs in impacted communities. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 44 Senator Zharoff MOVED for adoption of Amendment No. 44. Co- chairman Frank OBJECTED, advising of his recollection that funding for the Alaska Police Standards Council was previously dealt with in Amendment No. 14. Senator Rieger concurred. He explained that funding for FY 95 totaled $274.0. A prior amendment added $130.0 to the council. That represents half-year funding at the current level of operations. It reflects bridge money to "get to the point where program receipts can start to be collected." DEL SMITH, Deputy Commissioner, Dept. of Public Safety, came before committee. He explained that the $259.1 contained within Amendment 44 would fund two positions in police standards that currently certify and monitor 900 police officers. Beginning January 1, 1996, a ticket surcharge will accrue to the council to be used, statewide, for police training. End: SFC-95, #39, Side 1 Begin: SFC-95, #39, Side 2 In response to a question from Senator Zharoff, Senator Rieger explained that general funding would conclude at the end of December, 1995. Program receipts begin in January of 1996. They are expected to total approximately $300.0 annually. Intent language allows for use of the full amount of the Governor's program receipt request. Mr. Smith acknowledged that $350.0 in program receipts will be directed toward statewide police training, per passage of HB 319 last year. Senator Zharoff asked if the $259.1 contained within the amendment is necessary. Mr. Smith advised of FY 95 funding of $274.0. Amendment No. 14 funds the function for one-half year. Mr. Smith said he did not know whether the department has authority to utilize the program receipts to continue operations. Co-chairman Frank called for a show of hand on adoption of Amendment No. 44. The motion FAILED on a vote of 1 to 5 (Senator Donley did not appear to vote). AMENDMENT NO. 45 Senator Zharoff MOVED for adoption of Amendment No. 45. Co- chairman Frank OBJECTED. Senator Zharoff explained that the amendment would restore the personal services decrement to Alaska State Troopers, Detachments, in the Dept. of Public Safety budget. The subcommittee budget relies on federal interagency receipts (helmet money) that may not materialize. FY 95 funding for public safety was $30.5 million. The Governor requested $32.2 million. The House provided $31.3, and the Senate figure is $30.8. The proposed addition of $1,845.9 would raise the Senate number to $32.7. Senator Zharoff asked that the administration respond to the proposal. DEL SMITH, Deputy Commissioner, Dept. of Public Safety, again came before committee. He explained that the department will apply for federal highway safety planning funds totaling $1.6 million. The state is competing with ten other state agencies. The state share of $5.4 million in helmet moneys represents 60%. Forty percent must flow to local municipalities. There is approximately $10 million in requests for $5.4 million in available funding. The department could seek a $1.6 million grant to cover three years. That would provide $600.0 per year for a number of positions. Application for $1.6 million for one year would be frowned upon by the federal agency. Senator Zharoff asked what would happen if the grant is not received. Mr. Smith advised of substantial impact and layoffs within the division. Annalee McConnell stressed the risky nature of assuming that federal moneys will replace general fund dollars when it is known that federal moneys will not be forthcoming in that amount. That risk may be appropriate in some instances but not for public safety. She urged that the committee not substitute unknown federal dollars for general funds. In response to a question from Co-chairman Halford, Ms. McConnell reiterated that it would be reasonable for the department to receive $1.6 million for a three-year period. That amount is not likely to be provided for a single year. These are pilot projects. One-third of the funding each year is reasonable. Discussion followed regarding measures that might be taken to fill the $1.6 million budgetary hole. Mr. Smith referenced 32 court service officers and four troopers as an example of dollar reductions that would have to be made. Co-chairman Halford noted that, working from past conference committee and supplemental funding, the reduction would be $700.0 rather than the full $1.6 million. Senator Rieger spoke to subcommittee reasoning at the time the budget was developed. He noted, specifically, a $2.74 increase in helmet money between FY 95 and 96. He acknowledged the risk as well as need to remain within a restrictive cap. Annalee McConnell advised that for planning purposes, the department could expect $600.0 from the planning grant. Co-chairman Frank called for a show of hands on adoption of Amendment No. 45. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 46 Senator Zharoff MOVED for adoption of Amendment No. 46. Co- chairman Frank OBJECTED. Senator Zharoff explained that the amendment would switch the funding source for the enforcement component of fish and wildlife protection in the Dept. of Public Safety budget from fish and game funds to general funds. Annalee McConnell attested to support for the change. Current subcommittee funding would merely draw down the fish and game fund but not for the purposes originally established. Discussion followed concerning whether funds from the constitutionally established fish and game fund had previously been used for enforcement. Co-chairman Halford voiced his understanding that moneys from the fund flow through the commercial fisheries component and are utilized for enforcement through the Dept. of Fish and Game rather than the Dept. of Public Safety. FRANK RUE, Commissioner, Dept. of Fish and Game, again came before committee. He explained that moneys from the fund are utilized for special projects within the commercial fisheries component. It is used for crab management since most fines and forfeitures are from the crab fishery. Criminal fines go into the general fund. Fines and forfeitures from the fishery go into the fish and game fund. Co-chairman Frank voiced his understanding that enforcement officers within the Dept. of Public Safety actually make the arrests for fishing violations. He then asked why fish and game funds could not be used for enforcement by that department. Commissioner Rue acknowledged that fine and forfeiture moneys could be so utilized. However, these moneys are now slated for crab management within the Dept. of Fish and Game budget. Senator Rieger advised that the $555.0 shown in the budget and in the proposed amendment is the amount estimated to be in the fish and game fund sub-account (fines and forfeitures) as of June 30, 1996. It is not funding that will be utilized by the department during FY 96 but the balance expected to be in the account at the end of the fiscal year. KEVIN BROOKS, Director, Division of Administrative Services, Dept. of Fish and Game, came before committee. He suggested that it would be inappropriate to utilize the estimated balance in budgeting because in making the estimate the department merely matched revenues and expenditures. It is impossible, at this point, to determine what kind of revenue will flow into the fish and game fund during FY 96. The projected year-end balance for FY 95 is $513.0. The FY 96 request was based on an available balance in the fund. The current problem with the Senate budget is that appropriations for two departments (Dept. of Fish and Game and Dept. of Public Safety) are based on the same balance. Annalee McConnell advised that amounts collected from fines and forfeitures vary considerably from year to year and are not easily predicted. Co-chairman Halford noted that options appear to require the spread of a $555.0 reduction within the Dept. of Public Safety, a $555.0 reduction in the Dept. of Fish and Game, or a change of revenue source to general funds. The latter would increase the overall number by half a million dollars. Co-chairman Frank asked that Amendment No. 46 be WITHDRAWN pending additional work on the issue by Co-chairman Halford and Senator Rieger. [See page 53 and 4/20/95 minutes for subsequent action.] AMENDMENT NO. 47 Senator Donley MOVED for adoption of Amendment No. 47. Co- chairman Frank OBJECTED. Senator Donley advised of serious consequences from underfunding of the occupational safety and health budget, and he stressed that worker safety is a legitimate priority of state government. Co-chairman Halford inquired regarding previous-year funding. JERRY BURNETT, aide to Senator Phillips, explained that funding represents an 8% reduction from the Governor's requested level for the entire component. Annalee McConnell said that general funds for the component in the current budget total $276.0. To an earlier indication that the department "offered up $30.0," Ms. McConnell clarified that the department raised concern that the amount suggested was below the cap by $36.0. There was no indication that $36.0 would take care of the concern. Ms. McConnell further advised that Alaska statutes cover areas where federal statutes do not provide protection. One relates to hazardous materials (asbestos and paints). Another relates to industries (agriculture) that are exempt from federal regulations. When inspections are conducted for federal purposes, general funds allow for inspection for compliance with state statutes as well. Lack of general funds will preclude inspection for statutory compliance in areas not covered by federal law. Senator Zharoff inquired concerning the liability to which the state might be exposed due to failure to adequately enforce standards. He cited the fishing industry and cannery work as an example. ED FLANAGAN, Deputy Commissioner, Dept. of Labor, came before committee. He advised that he could not speak to strict liability but noted that the department is subject to complaints, "against our program administration with the federal government," if the state does not meet industry needs. The general fund match enables the department to meet minimum federal staffing requirements. He reiterated that state statutes that go beyond federal law must also be enforced. The program has gone from $276.0 in unrestricted general funds to zero in the Senate budget. That will be difficult in light of past federal reductions and the probability of further federal reductions next year. Co-chairman Frank asked if a general reduction would be preferable. Mr. Flanagan advised that the department would probably take the reduction "where the subcommittee came out." Co-chairman Halford referenced total FY 95 authorized funding of $33,516.8 and the FY 96 Senate proposal of $35,512.0 and asked where the overall increase in spending would go. NANCY SLAGLE, Director of Budget Review, Office of Management and Budget, advised of a $182.0 increment from program receipts. That was specifically for acquiring and selling OSHA regulations. ARBE WILLIAMS, Director, Division of Administrative Services, Dept. of Labor, came before committee. She noted an increment of approximately $1 million in federal authorization in the employment security division. Two grant lines were also increased a combined total of approximately $1 million for moneys flowing into the fish fund and STEP. Annalee McConnell stressed that increases in federal funds do not allow the department to deal with compliance issues for activities and industries that are not covered by federal OSHA standards. Ms. Williams added that increases occurred in components other than OSHA. Co-chairman Halford suggested that general funds could be shuffled out of components receiving increased federal moneys and used for state inspections. Ms. Williams acknowledged $13.0 in general funds in the employment security program. It provides a match for the Alaska work program. There is also $39.0 for the Governor's committee on employment of people with disabilities. Mr. Flanagan remarked that general funds have been "pretty well wrung out of all our BRUs." Co-chairman Frank called for a show of hands on adoption of Amendment No. 47. The motion FAILED on a vote of 2 to 5. [See page 59 for further discussion.] AMENDMENT NO. 48 Senator Zharoff MOVED for adoption of Amendment No. 48. OBJECTION was raised. Senator Zharoff explained that the amendment would restore general fund program receipts deleted from the occupational safety and health component in the Dept. of Labor budget. The restored $182.5 would fund resale of federal regulations. Annalee McConnell said that the service would make federal publications available to Alaskan employers. It does not require use of general funds. If the service is not provided, employers will purchase these materials directly from the federal government and pay an increased cost of 25%. The state is able to offer the materials at a discount. Annalee McConnell stressed that the cost of the program would be covered through sale of the materials. No general funds are involved. Discussion of promulgation of federal regulations and need by employers to update materials followed. Senator Zharoff asked that the amendment be HELD pending later consideration. [See pages 56 and 59 for subsequent discussion and action.] AMENDMENT NO. 49 Senator Zharoff MOVED for adoption of Amendment No. 49. Senator Sharp OBJECTED. Senator Zharoff explained that the $30.0 addition would restore the increment for rural veterans services included in the Governor's amended budget for the Dept. of Military and Veterans Affairs. JEFF MORRISON, Director, Administrative and Support Services, Dept. of Military and Veterans Affairs, informed members that the new program was included in the amended budget due to recognition that a considerable number of veterans in rural Alaska are not currently served by the VSO grant program and are unaware of many of their benefits. Past documentation indicates that the "return directly to the veterans, in terms of increased federal benefits, is in the range of 35-50 to 1." Census studies indicate there are approximately 12,000 veterans located outside of urban areas. End: SFC-95, #39, Side 2 Begin: SFC-95, #41, Side 1 Senator Phillips advised that he spoke with veterans who indicated they did not want the special assistant position if it would mean taking $25.0 out of the veterans program. He suggested it might be possible to delete the special assistant and fund rural outreach. Mr. Morrison said the special assistant position is high on the list of needs and desires of the new Commissioner. With deletion of the division director position several years ago, attention to the veterans program has been dismal. Senator Phillips suggested that he had received mixed signals from veterans and asked that the amendment be HELD pending clarification. [See page 57 for subsequent action.] AMENDMENT NO. 50 Co-chairman Frank voiced his understanding that similar intent relating to disaster relief funding through the disaster declaration process and submission of a supplemental request for FY 96 disaster relief costs was before the subcommittee for incorporation within the budget. He acknowledged subcommittee intent to fund disaster relief through the supplemental process. He noted need to review disaster declaration requirements and voiced his understanding that language requires consultation with presiding legislative officers. NANCY SLAGLE, Director of Budget Review, Office of Management and Budget, told members that if the cost of the disaster is anticipated to total over $1 million, the President of the Senate and Speaker of the House are notified. Annalee McConnell acknowledged her understanding that the House and Senate are interested in funding both disasters and fire suppression through the supplemental process rather than through up-front funding. She explained that the administration continues to recommend funding through the normal budget process because the state has been in a position where it was unable to pay disaster-related bills. Payment became caught in that period between when expenditures needed to be made and supplemental action was taken by the legislature. That will become more of a problem as cash becomes tighter and tighter. Ms. McConnell acknowledged legislative concern over expenditure of moneys by the administration when it is not authorized to do so. The state would have no choice but to be in that position if funding is to be provided via supplemental. Senator Zharoff noted passage of legislation requiring the state to pay its bills within 30 days or incur penalty. Co-chairman Frank noted statutory provisions which allow the Governor to use "any available funds" to pay emergency bills. He then directed that the amendment be HELD pending review of statutory disaster declaration language. [See 4/20/95 minutes for further action on this amendment.] AMENDMENT NO. 51 Co-chairman Frank voiced his understanding that the committee had already taken action on decreases in the oil and gas development component within the Dept. of Natural Resources. He then noted that Amendment No. 51 would restore $100.0 in general funds. Senator Zharoff MOVED for adoption. Co-chairman Frank OBJECTED, saying that the department could handle the relatively small reduction within the $4 million budget. Senator Zharoff noted that the reduction would result in fewer offerings and less revenues to the state. Annalee McConnell stressed need for conduct of lease sale analysis as quickly as possible. She further stressed need for economic development on a more equitable and expedited basis than in the past. The administration would prefer to be able to spread the reduction rather than target it to one area. Co-chairman Frank called for a show of hands on adoption of Amendment No. 51. The motion FAILED on a vote of 1 to 5 (Senator Donley did not appear to vote.) AMENDMENT NO. 52 Senator Zharoff MOVED for adoption of Amendment No. 52. Co- chairman Frank OBJECTED. Senator Zharoff explained that the amendment would restore two lead accountant positions within the budget for the Dept. of Natural Resources. It would add $175.8 in general funds to the administrative services component in the management and administration BRU and replace $175.8 in general funds with agriculture revolving loan funds within the agricultural development component of the resource development BRU. Without the two positions which collect and account for the department's $800 million in revenues, the state stands to lose direct revenues and incur significant audit exceptions and IRS penalties for non-compliance. Annalee McConnell advised of the Governor's commitment to both resolution of past problems with oil and gas accounting and move-ment toward expeditious, effective, and accurate collections. The subcommittee reduction goes beyond what is appropriate for good collection of revenues. JEFF HARTMAN, Assistant Director, Administrative Services, Dept. of Natural Resources, came before committee in response to a question from Senator Donley. He explained that the original cut of $255.8 in administrative services specifies elimination of the three top positions within the division. He noted that the director position is presently vacant. One of the positions is in charge of revenue accounting in Anchorage and accounts for revenues of $800 million a year. The second position is filled by Nico Bus. Mr. Hartman advised that he, himself, fills the third position. The commissioner would prefer to fund the three positions from general funds from the plant material center and replace general funds for the center with agriculture revolving loan funds. In response to a question from Senator Donley, Ms. McConnell said the Dept. of Natural Resources is the largest revenue collector overall. Collections stem from oil and gas revenues, timber sales, land payments, park fees, etc. Senator Zharoff stressed that the net impact of the amendment is zero. Co-chairman Frank called for a show of hands on adoption of Amendment No. 52. The motion FAILED on a vote of 2 to 5. Following the vote, Senator Donley asked why the proposed change in funding sources was not a good idea. Co-chairman Frank noted that the agriculture revolving loan fund has been raided over the years. Further withdrawals should not be made. The component has $1.9 million in total funding, and one of the positions is presently vacant. AMENDMENT NO. 53 Senator Zharoff MOVED for adoption of Amendment No. 53. Co- chairman Frank OBJECTED. Senator Zharoff explained that transfer of $75.0 in general funds for the plant material center to the land development - public information center component within the resource development BRU of the Dept. of Natural Resources and replacement of the general funds for agricultural development with agriculture revolving loan funds would restore the reduction to the department's customer services entity. The public wants more service, not less. Without the requested funding, the department may have to close the center. That would mean a reduction in program delivery to land contract administration, mining claims, parks, water, and other programs as well as a loss of "one-stop" convenience for the public. Jeff Hartman again came before committee. He noted that the budget for the center is $220.0. The department investigated a reduction in the hours the center is open and found that center operations are at a minimum. Co-chairman Frank said that the subcommittee reviewed the five-position component and felt adjustments could be made to operate with four. Further discussion followed regarding location of the center, the impact of closure of the central information office, and assumption of service center functions within individual divisions. Mr. Hartman referenced the agriculture revolving loan fund and noted that it contains $7.2 million in cash. The fund makes approximately 20 loans a year, and loans average $73.0. Even with the transfer envisioned in Amendment No. 53, the fund will be able to make agricultural loans through the year 2002. Senator Sharp asked if the fund would be subject to sweep to repay the constitutional budget reserve fund. MIKE GREANY, Director, Legislative Finance Division, suggested that the fact that it is a revolving loan fund removes it from the sweep. He advised that he would check into the status and return information to committee. Nancy Slagle voiced her understanding that the administration can make expenditures from the fund without an additional appropriation. Loans can be made for agricultural purposes. The fund does not fall under the criteria of "available for appropriation." Annalee McConnell clarified that moneys in the fund have already been appropriated and do not require further appropriation for moneys to be distributed through loans. Because there is no requirement for additional appropriation by the legislature, the funds are not subject to sweep. Discussion of appropriations to the agriculture revolving loan fund followed. Mike Greany noted that confusion results from a front section provision in the House budget which appropriates $50.0 from the agriculture revolving loan fund to the general fund as a special fund source. There is no annual requirement for a front section item to recharge the fund. It is a statutory, stand-alone, revolving loan fund. Annalee McConnell added that payments are made from the fund and repayments go directly back into the fund. That is the idea behind the revolving concept. Mr. Greany attested to past appropriations from the fund for administrative costs within the department. Further discussion of the number of agricultural loans and administrative costs associated with the $20.6 million in loans followed. Co-chairman Frank called for a show of hands on adoption of Amendment No. 53. The motion FAILED on a vote of 2 to 4 (Senator Sharp was temporarily absent from the meeting). AMENDMENT NO. 54 Senator Zharoff MOVED for adoption of Amendment No. 54. Co- chairman Frank OBJECTED. Senator Zharoff explained that the amendment would add $175.0 in general funds from the plant material center to the information resource management component in the management and administration BRU within the budget for the Dept. of Natural Resources. Plant material center moneys deleted from the agricultural development component in the resource development BRU would be replaced by $175.0 in agriculture revolving loan funds. He then asked that the administration speak to need. Co- chairman Frank advised of the subcommittee approach that divisions that require services from information resource management contribute to the component. Senator Zharoff suggested that the Governor's request "was down seven positions already." He then inquired regarding a position count. Annalee McConnell said that, overall, Senate numbers were $9.4 million less than the Governor's request. Commissioner Shively has indicated he would attempt to make the cuts work. However, he identified a few areas where he felt a high level of service to the public must be maintained to foster resource and economic development. That includes geophysical services. Mr. Hartman further attested to need for the automated land plat, particularly in relation to mental health lands. End: SFC-95, #41, Side 1 Begin: SFC-95, #41, Side 2 In response to a question regarding the number of positions, Co-chairman Frank voiced his understanding that the operating budget was not reduced by seven position. The positions were funded by capital improvement program funds. Reductions in personnel were made when the capital funds "ran out." Mr. Hartman concurred. Co-chairman Frank called for a show of hands on Amendment No. 54. The motion FAILED on a vote of 2 to 4 (Senator Rieger was absent from the meeting). AMENDMENT NO. 55 Co-chairman Frank noted that Amendment No. 55 is similar to Amendment No. 13 and would thus be WITHDRAWN. Senator Zharoff concurred. AMENDMENT NO. 56 Co-chairman Frank advised of similar language within the subcommittee budget for Dept. of Natural Resources fire suppression. Amendment language relating to the availability of funding through the disaster declaration process and via an FY 96 supplemental has been reworded to meet department needs. The Co-chairman said he had no problem with the amended language. Senator Zharoff MOVED for adoption of Amendment No. 56. Senator Sharp noted that the legislature has not always funded the full supplemental request from departments. Co-chairman Frank acknowledged that, but he noted that the option remains for the coming year. No objection having been raised, Amendment No. 56 was ADOPTED. AMENDMENT NO. 57 Senator Zharoff MOVED for adoption of Amendment No. 57. Co- chairman Frank OBJECTED, noting that it would increase the federal student aid component in the Alaska Postsecondary Education Commission of the Dept. of Education budget. The subcommittee felt this area should not be increased at this time due to declining revenues. Senator Zharoff explained that the amendment would take $39.6 from the WICHE program and place it in federal student aid. The state educational incentive grant program receives approximately 1,400 applications per year and awards only 325 grants. It is a needs-based program for low-income students. The Alaska Postsecondary Education Commission has provided a letter stating that money is available due to students cycling out of WICHE and unexpected withdrawals. If passed, the amendment would fund an additional 26 students. Co-chairman Frank referenced last year's decision to continue funding for ongoing WICHE students but not fund new students. As existing students drop out of WICHE, the department sought to use available WICHE funds elsewhere. The subcommittee took the position that funds not needed to maintain the state commitment to existing WICHE students should be returned to the general fund. JOE McCORMICK, Executive Director, Alaska Postsecondary Education Commission, came before committee. He attested to the fact that money from WICHE used instead for federal student aid would be well spent. The bulk of the applications for aid come from very low-income families. Students must demonstrate exceptional financial need to qualify. The federal match is approximately $163.0. Senator Zharoff asked if provision of the $39.6 would generate additional federal dollars. Mr. McCormick responded negatively. Discussion of the needs test used in qualifying a student for federal aid followed. Co-chairman Frank called for a show of hands on adoption of Amendment No. 57. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 58 Co-chairman Frank referenced a technical amendment (Amendment No. 86) relating to the Alaska State Council on the Arts and asked that it be dealt with first. AMENDMENT NO. 86 Co-chairman Frank directed attention to Amendment No. 86 and advised of subcommittee intent to effect a general reduction of $57.9 rather than a reduction of $57.9 in the grant line for the Alaska State Council on the Arts. Co-chairman Halford MOVED for adoption of Amendment No. 86. No objection having been raised, it was ADOPTED. AMENDMENT NO. 58 Senator Zharoff MOVED for adoption of Amendment No. 58. Co- chairman Frank OBJECTED. Senator Zharoff explained that the amendment would bring Alaska State Council on the Arts grant line funding up to the Governor's amended level and ensure council ability to match maximum federal funds. He attested to numerous personal opinion messages from constituents in support of the council. Co-chairman Frank advised of the subcommittee intent to capture as many federal funds as possible. DAVID SKIDMORE, aide to Senator Frank, explained that the department over-estimated the amount of federal funds that would be available for FY 96. Staff worked closely with the executive director of the council to develop the figure of $589.0 in expected federal moneys. An equal amount of general funds would guarantee the federal funding. That is the amount contained in the subcommittee proposal. KAREN REHFELD, Director, Administrative Services, Dept. of Education, came before committee. She advised that $589.0 is the minimum level of general funding needed to retain the current-year federal grant. However, under the proposed level of cuts, the council will need to go back to the federal National Endowment for the Arts and reapply. There is no guarantee the council will receive the same level of federal dollars. Co-chairman Frank called for a show of hands on adoption of Amendment No. 58. The motion FAILED on a vote of 2 to 4 (Senator Rieger was temporarily absent from the meeting). AMENDMENT NO. 59 Senator Zharoff MOVED for adoption of Amendment No. 59. OBJECTION was raised. Senator Zharoff explained that the amendment would restore funding for close-up, future problem solving, and student leadership programs in the Dept. of Education budget. It would also restore half of the cuts to the Alaska State Museum. Since funding for the foregoing would derive from the underground storage tank fund, the amendment would not increase overall general funding. Close-up has been zeroed in both House and Senate budgets. The other two programs were zeroed by the Senate but funded by the House. Co-chairman Frank voiced his understanding that moneys for the programs were grants to non-profit groups that coordinate the efforts. Funding for air travel is derived from other sources (district moneys and privately raised funds). If districts wish to continue the programs, they may allocate funding for that purpose. The Co-chairman noted that the academic decathlon has survived although funding for the event was removed from the state budget. If there is an interest in keeping the programs, districts and other groups will allocate funds for continuance. State funds, however, will not be provided. Senator Zharoff asked if funds could be moved among the three programs. KAREN REHFELD again came before committee. She said that initial allocations were based on a level of funding from several years ago. Reductions that occurred over the past few years were evenly spread among the three. Allocations within the $217.0 are $70.4 for close-up, $39.8 for future problem solving, and $107.0 for the student leadership program. Co-chairman Frank called for a show of hands on adoption of Amendment No. 59. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 60 Co-chairman Frank referenced the $711,114,140 appropriation in the proposed amendment and advised that the committee would not be including K-12 educational support in HB 100. Education will be funded in separate legislation. Senator Zharoff requested a brief recess. RECESS - 7:45 P.M. RECONVENE - 8:25 P.M. When the meeting was reconvened, Senator Zharoff directed attention to a Revised Amendment No. 60 and MOVED for adoption. Co-chairman Frank said he would not rule the amendment out of order, but he advised he wished to avoid lengthy discussion. He reiterated that education would be funded in separate legislation. Senator Zharoff explained that proposed funding via the amendment would maintain the $61.0 educational unit, take increased enrollment into account, and cover single and dual-site schools. He then asked if separate legislation containing educational funding would include those considerations. Co-chairman Frank acknowledged that that decision had not yet been made. KAREN REHFELD again came before committee. She advised that funding contained in the amendment is the amount requested in the Governor's budget. Senator Zharoff asked if educational funding in separate legislation would derive from the general fund, constitutional budget reserve, or a combination thereof. Co-chairman Frank again advised that that had not yet been decided. Senator Donley voiced support for education and questioned the process of funding "small bits and pieces of the budget." Co-chairman Frank noted that budgetary requests and concerns far out number available funding. Subcommittee work and committee hearings seek to establish priorities. Senator Donley remarked that without a spending plan, it is difficult to determine how funding now under review will fit with education needs. Co-chairman Frank acknowledged the concern. He then called for a show of hands on adoption of Amendment No. 60 (Revised). The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 61 Senator Zharoff MOVED for adoption of Amendment No. 61. Senator Rieger OBJECTED. Senator Zharoff said that the $169,961,700 in funding for the University of Alaska would restore the unallocated reduction. Co-chairman Frank noted that the amendment would bring general funds for the University up to the Governor's request and above FY 95 funding. Senator Zharoff advised that Senate funding of $167 million is below that for FY 95. The University has need for level funding. He then inquired concerning the impact of the $2 million reduction. MARY LOU BURTON, University of Alaska, came before committee. She concurred that the amount set forth in the amendment reflects the Governor's request--FY 95 authorized plus $500.0 for the opening of the natural science building. A $2.5 million reduction will require the University to decrease services. The University has long-term employment contracts and commitments to students. It is not an operation that changes quickly. The University went through a program assessment effort, but results are to be spread over a three-year time frame." A shorter time frame means the University will have to "take from those places that we can cut easier." She cited instructional labor pools and library books as examples and reiterated that it will not be easy to change programs in a short period of time. Senator Donley commented on University money wasted on legal fees due to illegal personnel practices and bad collective bargaining practices by the board of regents. Further discussion followed regarding the unallocated reduction. Ms. Burton advised that she could not now say how the reduction would be spread. Co-chairman Frank expressed intent that the decision be left to the University and board of regents. Senator Donley voiced lack of confidence in policy decisions made by the board. Co-chairman Frank called for a show of hands on adoption of Amendment No. 61. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 62 Senator Zharoff MOVED for adoption of intent language relating to an increase of general funds to the school of fisheries at the University and inclusion of a communications position within the school. Co-chairman Frank OBJECTED, saying that he would prefer to deal with the issue either on the floor of the Senate or at conference committee. The intent is counter to the committee approach in funding an unallocated reduction which allows the board of regents to make budgetary decisions. Senator Zharoff advised that he would WITHDRAW the amendment. AMENDMENT NO. 63 Senator Zharoff MOVED for adoption of Amendment No. 63. Senator Sharp OBJECTED. Senator Zharoff explained that the $415.0 in general funds for trial courts would provide for maintenance and operation of the new Anchorage courthouse (scheduled to open in January, 1996) for six months. ART SNOWDEN, Administrative Director, Alaska Court System, came before committee. He explained that the funding would cover heat, lights, and general maintenance in the new building from January to June, 1996. End: SFC-95, #41, Side 2 Begin: SFC-95, #43, Side 1 Discussion followed regarding where cuts in the proposed court system budget might be made to cover expenses of opening the new building. Co-chairman Halford advised that the cap for the court system did not allow for increments. It, in fact, required decrements to trial courts. He said if he were to add funds back to the budget, they would be for trial courts rather than for the new building. Senator Zharoff questioned the advisability of allowing the new building to sit vacant for six months because of lack of funding, suggesting that the legislature deal with the situation at the present time. In response to a question from Senator Phillips, Mr. Snowden explained that the new building is on budget. Senator Phillips asked if funds for the project could be used for operation and maintenance if it is under budget at completion. Mr. Snowden suggested that could be done if the legislature would allow it. He noted that construction moneys are capital and could not be used for operation and maintenance. Co-chairman Frank called for a show of hands on adoption of Amendment No. 63. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 64 Senator Zharoff MOVED for adoption of Amendment No. 64. Co- chairman Halford OBJECTED. Senator Zharoff explained that the amendment would provide $67.7 for a labor relations/ADA coordinator within the administration component of the Court System budget. The position is needed because of recent organization of approximately 250 court employees by IBEW. The position will also handle rapidly increasing demands for access to court services by persons with disabilities. ART SNOWDEN again came before committee, stressing need to negotiate with the union in good faith. Further, the Court System is the most prone to complaints regarding the ADA. The position is funded in the House budget. Senator Zharoff noted that the Senate budget of $5.4 million is below FY 95 funding, lower than that of the House, and much lower than the Governor's request of $6.2 million. Co-chairman Frank called for a show of hands on adoption of Amendment No. 64. The motion FAILED on a vote of 2 to 5. Further discussion followed regarding Court System inability to utilize labor relations staff at the Dept. of Administration because of possible claims of collusion and unfair labor practices. AMENDMENT NO. 65 Senator Zharoff MOVED for adoption of Amendment No. 65. He explained that the $60.4 for the administration component of the Court System would provide for a computer trainer in Anchorage. He noted that the Senate figure is lower than both FY 95 funding and the Governor's request. ART SNOWDEN told members that the judiciary is becoming computerized. While one person cannot train everyone in the system, the position could develop materials to assist in district training. Co-chairman Frank called for a show of hands on adoption of Amendment No. 65. The motion FAILED on a vote of 1 to 5 (Senator Donley did not appear to vote). AMENDMENT NO. 66 Senator Zharoff MOVED for adoption of Amendment No. 66. He explained that addition of $111.4 in general funds to the administration component in the Court System budget would restore the unallocated 2% reduction. ART SNOWDEN advised that $111.4 was removed to meet the cap. This particular component is already underfunded 12%. The statewide average is approximately 5.5%. Trial courts are at 7%. Co-chairman Frank voiced his understanding that the underfunding relates to vacancy. Mr. Snowden concurred and noted that "Every job in the court system, Mr. Chairman, is automatically frozen at the beginning of every fiscal year for 45 days unless I personally sign a waiver." Very few waivers are signed. The court system reviews its budget in January, and if expenses are higher than they should be, a complete freeze is put in place. That slows the filing of papers in civil cases. He explained that the state must move criminal cases within 120 days. Budget reductions have taken a toll in civil cases. Co-chairman Frank called for a show of hands on adoption of Amendment No. 66. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 67 Senator Zharoff MOVED for adoption of Amendment No. 67. Co- chairman Halford OBJECTED. He suggested that if the committee seeks to improve the status of trial courts, the Alaska Judicial Council would be a good place from which to remove funding. He noted that the council operated for many years with a budget of $200.0 to $300.0 and much volunteer help. It does not need the present $500.0 and certainly not the $667.8 proposed by the amendment. Co-chairman Halford then MOVED to amend the amendment by reducing the $500.0 to $300.0 and moving the $200.0 difference to the trial court budget. Senator Zharoff OBJECTED, asking what impact the amendment to the amendment would have. Co-chairman Halford acknowledged that the council conducts a substantial number of research projects for the judiciary. He then recited a list of projects. The function of the council is to evaluate and recommend candidates for judges. That can be done with substantially less money. Senator Donley concurred that the funding would be better placed in trial courts. Co-chairman Halford next withdrew his motion for adoption of the amendment to Amendment No. 67 to allow for a vote on the main motion. Co-chairman Frank called for a show of hands on adoption of Amendment No. 67. The motion FAILED on a vote of 2 to 5. Co-chairman Halford then restated his MOTION to reduce Alaska Judicial Council funding from $500.0 to $300.0 and place the $200.0 difference in the trial courts budget. Senator Zharoff OBJECTED, voicing concern regarding impact on the council. Co-chairman Frank called for a show of hands on adoption of the amendment. The verbal amendment was ADOPTED on a vote of 6 to 1. [The foregoing verbal amendment was subsequently reduced to written form in Amendment No. 89.] AMENDMENT NO. 68 Senator Zharoff MOVED for adoption of Amendment No. 68. Co- chairman Frank OBJECTED. Senator Zharoff explained that the proposed front section provisions would fund monetary terms of collective bargaining agreements for the Dept. of Public Safety; Dept. of Transportation and Public Facilities; Office of the Governor for the Labor, Trades and Crafts unit; Dept. of Administration for the Labor, Trades and Crafts unit; and Office of the Governor for the supervisory unit. ANNALEE McCONNELL voiced strong support for the collective bargaining process. Contracts were negotiated in good faith by the prior administration. She stressed need for the state to send the message that when contracts are negotiated in good faith, the state fulfills the contracts. She urged support for the amendment. NANCY SLAGLE noted that the first section of the amendment, containing $203.6 for public safety employees, funds the second year of a contract from last year. It was not newly negotiated. Funding is included in the House budget. Senator Zharoff inquired concerning the impact of not funding the contracts. Annalee McConnell stressed need for a clear statement from the legislature concerning whether or not contracts will be supported. ALISON ELGEE, Deputy Commissioner, Dept. of Administration, came before committee. She explained that failure of the legislature to fund the contracts, and legislative failure to indicate that it is taking action not to fund them (such as language proposed by the House) would force the administration to honor "these contracts with the funds available to us." That would result in an additional unallocated reduction. Co-chairman Halford noted that the first paragraph of the amendment ($250,000 for the Dept. of Public Safety) is already in the House bill. Remaining sections are in conflict with sections in the House bill. Annalee McConnell acknowledged that the amendment contains the original front section language proposed by the Governor. Co-chairman Frank suggested that Amendment No. 68 be HELD pending review of the front section of the budget. [See 4/20/95 minutes for subsequent committee action.] AMENDMENTS 69, 70, and 71 Co-chairman Frank noted that Amendments 69, 70, and 71 relate to the front section and asked that they be HELD for later consideration. [See 4/20/95 minutes for further action.] AMENDMENT NO. 72 Co-chairman Frank noted that Amendment No. 72 was previously adopted. (See page 19 of these minutes.) AMENDMENT NO. 73 Senator Donley advised that funding set forth in the amendment for the Rural Alaska Television Network should read $819.0 rather than $978.7. The difference between the two reflects a capital project that should appear in the capital budget. Amendment No. 73 would fill blanks in the Senate budget, in terms of RATNET funding, with the House number. Previous testimony before committee indicated that if the $819.0 was provided as well as that contained within the subcommittee budget, the proposal to combine Alaska Public Broadcasting and RATNET services could be accomplished. Senator Donley MOVED for adoption of Amendment No. 73. OBJECTION was raised. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 24 Co-chairman Frank directed that committee consideration revert to Amendment No. 24. Senator Zharoff MOVED for adoption of an additional $1.1 million for RATNET. Senator Phillips OBJECTED. Senator Zharoff stressed that RATNET provides information, news, and emergency messages to remote areas of the state. MARK BADGER, Director, Division of Information Services, Dept. of Administration, again came before committee to reiterate the importance of "keeping rural Alaskans connected to the urban cultures and vice versa." RATNET performs that function. It is evolving. It is not a static system. It is moving into a new information environment that many Alaskans have said they want the state to acknowledge and engage. Not providing a line item for RATNET represents a step backward. Mr. Badger stressed need for funding the transponder, saying that RATNET bridges the cultural and geographic barriers of Alaska's people. Senator Donley advised that he would support the addition were a funding source available. Amendment No. 24 identifies no source other than general funds. Senator Zharoff stressed that many communities benefitting from RATNET do not benefit from general fund expenditure for numerous other programs for the rest of the state. Annalee McConnell advised that the state has an opportunity to retain a level of service throughout the state "so that we aren't in a position of having such an enormous difference between what is available in the urban areas and what's available in the rest of the state." She urged support for the amendment which would make service available at greatly reduced cost. Senator Donley inquired concerning need for the $1.1 million, advising of his understanding that RATNET needed the House number combined with that of the Senate. He specifically referenced prior indication that $819.0 would be needed. Mr. Badger explained that the transition would cost money. He subsequently acknowledged that the $819.0 would work. He further noted that even with either of the above-noted numbers, the Alaska Broadcast Commission and RATNET have sustained a 22.5% reduction. The status quo will not be maintained. Even with a line item addition for RATNET, the system will be changed and continue to evolve in a healthy way at a big reduction. Co-chairman Frank called for a show of hands on adoption of Amendment No. 24. The motion FAILED on a vote of 2 to 5. Senator Donley MOVED for funding of $819.0 for RATNET. Co- chairman Frank called for a show of hands. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 74 Senator Donley explained that additional funding to the Dept. of Environmental Conservation would bring the Senate number for new federal mandates on air quality up to the House level. Funding would be taken from the storage tank assistance fund. Co-chairman Frank referenced federal requirements that additions to the program be fee based. He then voiced OBJECTION to the amendment since there are alternatives which address the concern. Co-chairman Frank called for a show of hands on adoption of Amendment No. 74. The motion FAILED on a vote of 1 to 5 (Senator Zharoff did not appear to vote). AMENDMENT NO. 75 Senator Donley advised that an additional $60.0 in the Commissioner's Office of the Dept. of Environmental Conservation would offset problems that may be created by Senate numbers for dealing with federal mandates. The proposed addition is intended to provide flexibility in addressing the problem. Co-chairman Frank called for a show of hands on adoption of Amendment No. 75. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 76 Senator Donley explained that Amendment No. 76 would take $100.0 from the public defender's office and add $50.0 to the office of public advocacy and $50.0 to criminal prosecution. He referenced a handout (copy appended to Amendment No. 76, attached to these minutes) and noted that it evidences increases in prosecution expenditures over the past ten years. He further spoke to need for increased funding for the office of public advocacy, advising of trial delays because the office does not have sufficient resources to adequately deal with the number of trials. End: SFC-95, #43, Side 1 Begin: SFC-95, $43, Side 2 Discussion of activities within the public defender agency followed. Senator Donley stressed need to reprioritize funding among the public defender, public advocacy, and prosecution and shift resources to areas where they are more greatly needed. Senator Zharoff inquired regarding the impact on the public defender agency. Annalee McConnell remarked that the agency is already under funded. She acknowledged that the most serious under funding is in the office of public advocacy. Under funding relates to both FY 96 and the sizable shortfall from FY 95. The House number under funds the agency by $655.0. The Senate figure adds $200.0, but the net two-year shortfall remains $450.0. Senator Phillips voiced support for the amendment. Co- chairman Halford advised that he could support the amendment, but he cautioned that as the committee adds to prosecution and maintains reductions on the civil side of the Dept. of Law, it should be understood that the department will not transfer activities from the civil side to the criminal side. Co-chairman Frank noted that no reductions were made in prosecution. He then asked if Senator Donley would consider removing funding from the public defender and placing it only in public advocacy. Co- chairman Halford concurred that no reductions were made in prosecution, but he also acknowledged that prosecution is under funded in terms of "what they're able to do." Senator Donley referenced figures indicating that, over a ten year period, prosecution received a 4% increase in funding versus a 47% increase for the public defender. Further discussion of increases in all three agencies followed. SHARON BARTON, Director, Division of Administrative Services, Dept. of Administration, came before committee. She concurred that the office of public advocacy is a response agency. The remedy to increases is not within the agency but within the system as a whole. Annalee McConnell advised that the new administration would be examining the entire criminal justice system. Referencing public advocacy, specifically, Ms. McConnell further voiced concern that if the agency is unable to continue to get attorneys on a voluntary basis, appointments will be made by the courts. At that point the state will no longer pay $65 to $70 an hour for these services but will have to pay the going rate which is well over $100 an hour. Sharon Barton cautioned against a straight comparison of the three agencies. She attested to prosecution costs that are not funded in the prosecution budget and prosecution costs funded "straight out of the public defender budget." That makes the public defender budget look much larger compared to prosecution. Discussion followed regarding supplemental and subcommittee funding of prosecution, the public defender, and public advocacy. JERRY BURNETT, aide to Senator Phillips, advised of the following: Public Defender FY 95 authorized - $7,792.8 w/supp. and RPLs - $8,200.0 Senate - $8,154.7 Public Advocacy FY 95 authorized - $6,614.5 w/supp. and RPLs - $7,279.0 Senate - $7,139.6 Ms. McConnell stressed that public advocacy numbers also relate to abused children with great needs. She described Alaska's rate of child abuse as "absolutely outrageous." Attempts to reduce funding to last year's number do not account for the fact that Alaska has a growing problem that must be dealt with. She further attested to lack of flexibility in transferring funds from one area of the budget to another with greater need. Co-chairman Frank suggested that necessary flexibility is provided via supplemental funding. Ms. McConnell advised that she wished to be on record as saying that the administration has done a great deal in working with the legislature on cuts. The "company line has not been that we're only asking for more money." The administration started out with a budget that represented the ceiling rather than the floor. it has not defended "every dollar of those budgets." The focus has been on areas of most importance. Further discussion followed regarding the subcommittee process and restrictions applied by caps. Senator Rieger voiced support for moving the entire $100.0 from the public defender agency into public advocacy, and said he would MOVE for that as an amendment to Amendment No. 76. Co-chairman Halford concurred, noting the sizable shortfall in public advocacy and the fact that prosecution is funded within $15.0 of last year. Co-chairman Frank agreed. Senator Zharoff expressed concern over removal of funding from the public defender agency since that agency is most noticeable in rural areas. Co-chairman Frank called for a show of hands on adoption of the amendment to Amendment No. 76. The motion CARRIED on a vote of 4 to 3 (Senators Zharoff, Phillips, and Donley were opposed). Co-chairman Frank called for a show of hands on adoption of Amendment No. 76, as amended. The motion CARRIED on a vote of 5 to 2. AMENDMENT NO. 77 Senator Donley MOVED for adoption of the amendment appropriating $500.0 from the underground storage tank assistance fund to the Dept. of Environmental Conservation to mitigate the effect of federal mandates regarding air quality, clean water, and other needs. He explained that the department requested $1.1 million in program receipt authority. Co-chairman Frank OBJECTED and called for a show of hands. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 78 Senator Donley referenced past attempts to deal with the prison over-population problem by under funding prosecutors and "beefing up the public defender's budget." He voiced disagreement with that approach and spoke in support of need for Amendment No. 78, which would restore $1,696.6 to the budget for the Dept. of Corrections. He suggested that plans for an additional correctional facility should have commenced eight years ago. Lengthy discussion followed between Senator Donley and Co- chairman Frank regarding correctional needs and responses to those needs contained within the Senate budget. Co-chairman Frank stressed that the budget contains over $600.0 in additional funding for institutions, beyond that provided in the supplemental. Further discussion of overcrowding, vacancy, and out-of-state placement followed. Senator Donley inquired concerning the backlog of 700 misdemeanants waiting to serve time and a subsequent court order directing the department to provide more timely access to jails. MARGARET PUGH, Commissioner, Dept. of Corrections, came before committee. She acknowledged that an Anchorage court removed department ability to "schedule people into the institutions." The court now does that scheduling. While a backlog is no longer building up, there is chronic overcrowding at the Sixth Avenue institution. That overflows to Hiland Mountain and Palmer. The department is constantly shuffling inmates out to available CRC beds. The Commissioner referenced recent inmate population figures and noted a total of 2,593 and a capacity of 2,665. Senator Donley questioned how much deterrent is provided by the fact that misdemeanants must wait one to two years to serve time. Co-chairman Frank concurred in the concern but noted that the proposed amendment would not increase capacity. End: SFC-95, #43, Side 2 Begin: SFC-95, #45, Side 1 Annalee McConnell acknowledged that while the amendment would not provide additional beds, it would allow for adequate staff as the inmate population once again approaches emergency capacity. Danger levels increase when capacity is reached. There is usually a drop in population in the spring. That has not occurred this year. Co-chairman Frank called for a show of hands on adoption of Amendment No. 78. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 79 Senator Donley noted that the proposal contained in Amendment No. 79 is similar to that in Amendment No. 19 (page 12). He said he would, therefore, not offer Amendment No. 79. AMENDMENT NO. 80 Senator Donley explained that when the mandatory insurance act was passed, motor vehicle registration fees were raised to pay for enforcement. Over time, the legislature has not provided the division of motor vehicles full program receipt authority. The department counters by threatening to no longer enforce mandatory auto insurance and financial responsibility laws. Intent language within Amendment NO. 80 would make clear that the legislature wants those programs continued, and the division should find a means within its budget to prioritize the programs. Senator Rieger voiced support for the language, advising of his intent to support RPL requests for use of increased program receipts to assist division of motor vehicle field services. Co-chairman Frank voiced a preference for rewording intent to require the division to continue enforcement of the programs within existing levels of appropriation. He noted that the intended fees were building into revenue projections. They are not true program receipts. Co- chairman Halford further questioned intent that directs approval by the Legislative Budget and Audit Committee. Co- chairman Frank asked that Amendment No. 80 be temporarily WITHDRAWN for rewording and subsequent presentation to committee. [See page 57 of these minutes for new language adopted by committee.] AMENDMENT NO. 81 Senator Donley explained that Amendment No. 81 is a duplicate of Amendment No 3 (See page 3 of these minutes). Amendment No. 81 was thus WITHDRAWN. AMENDMENT NO. 82 Senator Donley explained that the Dept. of Military and Veterans Affairs has participated with the troopers and other law enforcement agencies in a drug eradication program. He noted he had received concerns from constituents regarding the relationship between the military and law enforcement. He stressed need for the department to make operational guidelines available to the public. Co- chairman Halford noted that most Dept. of Military and Veterans Affairs funding is federal. He then questioned whether intent language could be applied. Annalee McConnell concurred that no general funds are involved. Members of the national guard are, on occasion, asked by the federal government or troopers to assist in "a bust," but the program is not operated by the Dept. of Military and Veterans Affairs. Senator Donley said that the moneys are only expended when the guard is acting in a state rather than federal capacity. He noted a requirement that the state Attorney General issue written approval of the operation before the funds can be utilized. Senator Rieger acknowledged the U.S. Constitutional prohibition on federal military enforcement of domestic state law. Co-chairman Frank called for objections to the proposed intent language. No objection having been raised, intent language within Amendment No. 82 was ADOPTED. AMENDMENT NO. 83 Senator Donley explained that intent language within the amendment requests that parks and recreation management within the Dept. of Natural Resources give a preference to residents over non-residents when adopting user fees. It asks that the fee schedule charge higher fees to non- residents at a 4 to 1 ratio. Senator Donley then MOVED to add "least" following the word "at" so that language reads: "at least a 4 to 1 ratio." The Senator noted that different fees for residents and non-residents is a common practice in many states. Discussion followed regarding how the department would determine whether a user of park services is a resident or non-resident. Senator Donley noted that the department is already in the process of making a distinction between residents and non-residents. Intent language merely suggests an appropriate ratio. Annalee McConnell noted that some fees are presently $12.00. If the cost were quadrupled, the state would price itself out of the market in terms of what is acceptable to visitors. Co-chairman Frank also expressed concern regarding the proposed ratio. While the thrust of the intent is proper, it goes too far in establishing a specific ratio. Senator Donley MOVED to delete "at a 4 to 1 ratio" from the intent. Language would then read: It is the intent of the legislature that the Department of Natural Resources, Division of Parks and Recreation, review the user fees associated with Alaska's state parks and adopt a fee schedule that charges higher fees to non-residents. Senator Rieger advised that he would be supportive of a 2 or 2.5 to 1 ratio in order to give strong direction to the division. Co-chairman Frank remarked on need to maintain a relationship between state fees and those of the private sector while garnering a higher fee from out-of-state visitors. He noted that the department has many fees for many purposes and questioned whether a strict ratio would be appropriate in all instances. Co-chairman Frank called for objections to the intent language as amended. No objection having been raised, Amendment No. 83 was ADOPTED, as amended. AMENDMENT NO. 84 Senator Randy Phillips explained that the amendment would remove funding for public broadcasting radio and public broadcasting T.V. from the statewide communications services BRU in the Dept. of Administration budget and place the funding within a new BRU entitled: Public Broadcasting Endowment Trust, designated grant, under AS 37.05.316 (named recipient grant). JOHN NEWSTROM, Southeast Media Consortium (a group of Southeast public radio stations) came before committee. He explained that he was also representing public broadcasters in Alaska. He voiced support for Amendment No. 84 and provided background information on the public broadcast strategic planning process since 1992. Part of that effort included privatization and support via private funds. Discussion followed regarding membership in both of the foregoing organizations and the means of appointment as well as the status of the current Alaska Public Broadcasting Commission appointed by the Governor. Co-chairman Halford questioned the advisability of changing from a known system, whereby members are appointed and confirmed, to an unknown entity without establishment in law. He voiced support for privatization but expressed reluctance to effect the funding change until an alternative to the present system is in place. He cautioned against abolishing something by taking away its function without legislation. By changing a line item in the budget, the committee would be "doing away with something that's been there for years." He suggested that that is the wrong way to proceed. For clarification, Mr. Newstrom directed attention to intent language within Amendment No. 85. Co-chairman Halford concurred in the intent but continued to question the timing. Changes should be incorporated within substantive legislation and debate be had thereon. Co-chairman Frank agreed, advising that while he was not opposed to the idea, the Finance Committee is not the proper forum for a final decision on establishment of the proposed mechanism. Co- chairman Halford cautioned against providing a substantial grant to a private entity before the entity is "really defined in a way that we know it's going to stay." Senator Sharp voiced concern regarding accountability. Senator Phillips MOVED for adoption of Amendment No. 84. Co-chairman Frank called for a show of hands. The motion FAILED on a vote of 3 to 4. AMENDMENT NO. 85 Senator Phillips moved to WITHDRAW Amendment No. 85 (intent regarding the public broadcasting endowment trust), advising that t might be offered for consideration at a later time. [See page 57.] AMENDMENTS 86, 87, 88, and 89 Amendments 86 (p. 35), 87 (pp. 22-24), and 89 (Amend. 67, pp. 40-41) were earlier ADOPTED. Amendment No. 88 was WITHDRAWN since it was the same as Amendment No. 46 (pages 26-27). AMENDMENT NO. 22 Senator Zharoff inquired concerning the status of Amendment No. 22. Co-chairman Frank advised that it was held pending further information from Senator Halford. Co-chairman Halford said he would develop an amendment to put program receipts back in the environmental compliance component. Co-chairman Frank asked that consideration of Amendment No. 22 again be HELD. [See pages 54-55 for subsequent action.] AMENDMENT NO. 31 Senator Zharoff MOVED for adoption of Amendment No. 31 which he explained would restore funding for the Division of Subsistence to the FY 95 authorized level. The Senate budget currently has no funding for the division. End: SFC-95, #45, Side 1 Begin: SFC-95, #45, Side 2 If funding is not restored, the reduction will solidify federal management of fish and wildlife resources in Alaska. Lack of reliable information could restrict commercial and sport use and lead to conservation problems and litigation. Senator Sharp explained that the subcommittee deleted general funds for the division. Expenditure of $1,014,300 in the special project fund (federal funds and program receipts) was approved. KEVIN BROOKS, Director, Administrative Services, Dept. of Fish and Game, came before committee. He explained that all non-general funds for the BRU are in the special projects component. Without general funds, there will be no division to operate the project. So, in effect, the general fund reduction would result in forfeiture of federal funds as well. The division receives moneys from federal agencies to perform fish counts, collect data, and conduct various studies. Subsistence resource specialists are typically the "journey" level job class. Anthropologists within the wildlife division work on harvest surveys in remote areas of Alaska. Co-chairman Frank called for a show of hands on adoption of Amendment No. 31. The motion FAILED on a vote of 1 to 5. (Senator Donley did not appear to vote.) AMENDMENT NO. 32 Senator Zharoff MOVED for adoption of Amendment No. 32. Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would restore $711.2 in general funds to the habitat division. Proposed cuts in habitat would result in a 50% reduction in forest practices' staff. Comments followed regarding impact of the cut in terms of implementation of the forest practices act, permitting offices, oil and gas lease sale reviews, lack of capability to provide crucial fish and wildlife data, and participation in land use initiatives. Discussion followed regarding Title 16 permitting provisions. Senator Sharp advised that permitting is funded at 100% of the FY 95 level. There is no funding cut. Annalee McConnell noted that in instances of subsistence, habitat, and commercial fisheries, it is important to maintain a level of operation to protect existing resources and ensure good data for the future. On behalf of the administration, she expressed strong support for subsistence, habitat, and commercial fisheries. She pointed to other states as an example of what has happened in areas where habitat was not carefully managed. Senator Sharp noted that the $200.0 reduction was proposed by the administration for transfer to sport fisheries. Co-chairman Frank called for a show of hands on adoption of Amendment No. 32. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 33 Senator Zharoff noted that Amendment No. 87 (pages 22-24) is similar. He advised that while 87 does not go far enough, he would nevertheless withdraw Amendment No. 33 with the hope that it might be incorporated within the budget at a later date. AMENDMENT NO. 34 Senator Zharoff MOVED for adoption of Amendment No. 34. Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would add $159.3 to the Commissioner's Office of the Dept. of Fish and Game to restore the subcommittee reduction. The reduction would eliminate one deputy commissioner and the director of external and international fisheries. That would restrict state participation in: The Boards of Fish and Game Migratory Bird Act negotiations Pacific Salmon Treaty negotiations North Pacific Fishery Management Council Without the positions, the department will have a difficult time defending Alaska's interest in critical national and international forums. The addition would restore funding to the Governor's original request. Senator Sharp explained that while the House budget reduces an actual position, the Senate took an unallocated reduction in the Commissioner's Office. Subcommittee funding also combined boards, administrative services, the Commissioner's Office, and public communications within a $7,144.0 appropriation to provide flexibility in making the reduction. KEVIN BROOKS again came before committee. He noted that a majority of the funding within the Commissioner's Office is for positions. He attested to full board expenditure of annual appropriations and noted a $330.0 reduction in the other BRU included in the new combination. The total $500.0 reduction will have consequences since it is of a magnitude that cannot be entirely absorbed through merger. Co-chairman Frank called for a show of hands on adoption of Amendment No. 34. The motion FAILED on a vote of 1 to 5 (Senator Donley did not appear to vote.) AMENDMENT NO. 35 Senator Zharoff directed attention to Amendment No. 35 and advised that requested funding for Bering Sea Fishermen's Association operations should be $100.4 rather than $110.4. He then MOVED for adoption. Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would delete $200.0 for the new harvest incentive program in the Dept. of Fish and Game and would add $200.0 in general funds for three designated grants through the Dept. of Community and Regional Affairs: North Slope Borough Whale Census $ 60.0 Yukon River Fisheries Drainage Assoc. $ 29.6 Bering Sea Fishermen's Assoc. $100.4 Senator Sharp noted that the $200.0 reflects fish and game fund moneys which cannot be used for the foregoing projects. Senator Zharoff acknowledged that the funds might be restricted. He then MOVED to change the source of the $200.0 to general funds. Speaking to need for the Whale Census, Senator Zharoff noted that subsistence whale hunts are allowed in ten Alaska coastal villages. Census figures are an important factor used by the International Whaling Commission in establishing subsistence harvest quotas. Senator Sharp declared a conflict of interest, advising that his son had flown aircraft used in census taking over the last few years. Senator Zharoff next spoke to the importance of funding for the Bering Sea Fishermen's Association and the Yukon River Fisheries Drainage Association and information and assistance provided by both organizations in herring, salmon, halibut, and bottom fisheries. Co-chairman Frank called for a show of hands on adoption of Amendment No. 35. The motion FAILED on a vote of 1 to 4 (Senator Donley did not appear to vote, and Senator Rieger was temporarily out of the committee room). AMENDMENT NO. 46 Senator Zharoff MOVED for adoption of Amendment No. 46. He explained that it would switch the funding source for $555.0 within the enforcement component, fish and wildlife protection BRU, of the Dept. of Public Safety from fish and game fund moneys to general funds. Fish and game fund moneys are already slated for other programs. ANNALEE McCONNELL noted that Amendment No. 46 is similar to Amendment No. 88 (withdrawn, page 50). She voiced support for the change to general funds, saying that fish and game fund moneys are being used in the commercial fishery (crab) budget. Co-chairman Frank voiced concern regarding an overall increase in the budget and said he was reluctant to support the amendment. Discussion followed regarding fees and forfeitures accruing to the fish and game fund and budget proposals for expenditure of fund balances for FY 95 and 96. KEVIN BROOKS acknowledged that proposed funding would be "a one-time shot that would deplete the balance" and leave nothing for FY 97. Co-chairman Frank directed that the meeting be recessed for Senate Floor Action. RECESS - 11:30 P.M. RECONVENE - 12:20 A.M. Upon reconvening the meeting, Co-chairman Halford requested unanimous consent for adoption of Amendment No. 46. No objection having been raised, Amendment No. 46 was ADOPTED. AMENDMENT NO. 91 Senator Zharoff presented Amendment No. 91 in jest. It was then withdrawn. AMENDMENT NO. 92 Co-chairman Frank explained that the amendment, by Senator Zharoff, would add $361.0 to the grants line for Alaska Legal Services Corporation in the Dept. of Community and Regional Affairs and reduce funding for the Alaska Tourism Marketing Council within the Dept. of Commerce and Economic Development by a like amount. Senator Zharoff MOVED for adoption. Senator Sharp OBJECTED. Senator Zharoff said that use of Alaska Legal Services would be restricted to divorce, custody, adoption, child or spouse abuse, and child support. It would not handle criminal matters, accept fee- generating cases, or deal with subsistence issues. He noted that the corporation provides needed legal services in "more remote areas of the state." Co-chairman Frank called for a show of hands on adoption of Amendment No. 92. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 93 Co-chairman Halford explained that the amendment would add the following program receipts in two budget components for the Dept. of Law: Environmental Compliance $309.7 Exxon Valdez Litigation 50.0 Funding would remain below last year. Both components will generate additional program receipts. Co-chairman Frank called for objections. No objection having been raised, Amendment No. 93 was ADOPTED. AMENDMENT NO. 22 Co-chairman Frank noted that additional funding for environmental law was added in Amendment No. 93 (above). Senator Zharoff MOVED to exclude the $200.0 in general funds for environmental law from the proposed amendment. No objection having been raised, the amendment to the amendment was ADOPTED. Senator Zharoff then MOVED for adoption of Amendment No 22, as amended. Co-chairman Halford OBJECTED. BARBARA RITCHIE, Deputy Attorney General, Dept. of Law, came before committee. She explained that the amendment would restore $150.0 for fair business practices. It would bring funding for the component up to that requested by the Governor and restore moneys for antitrust activities and consumer protection. Addition of $650.0 to the operations component would allow the department to continue efforts in natural resources, legislation, and regulations. Emphasis would be on natural resources in terms of fish and game allocation, disputes, and litigation. Senator Donley voiced concern regarding rumors that the department might attempt to transfer additional duties to prosecutors to free civil staff. End: SFC-95, #45, Side 2 Begin: SFC-95, #47, Side 1 Mrs. Ritchie advised that such shifting would not occur. Co-chairman Frank called for a show of hands on adoption of Amendment No. 22. The motion FAILED on a vote of 2 to 5. DEPT. OF COMMERCE AND ECONOMIC DEVELOPMENT At this point in the meeting, Co-chairman Frank directed that the subcommittee recommendation for the Alaska Seafood Marketing Institute (ASMI) be presented. Senator Sharp MOVED for total funding of $14,045.8 as a working figure. No objection having been raised, the figure was ADOPTED. AMENDMENT NO. 39 Senator Zharoff MOVED for adoption of Amendment No. 39. Senator Sharp OBJECTED. Senator Zharoff explained that the amendment would restore the $200.0 general fund match for Alaska Seafood Marketing. There is potential that ASMI may receive an additional $1 million in federal funds for which a match would be required. Discussion followed regarding institute ability to use assessment funds as a match. GUY BELL, Director, Administrative Services, Dept. of Commerce and Economic Development, advised that the board could allow use of assessment revenues as match funding. The requested $200.0 would match $1 million in anticipated federal funds. The institute will not know until the end of May whether or not it will receive the federal moneys. Further discussion of subcommittee action and whether or not the additional $200.0 was needed as a match followed. Additional discussion ensued regarding collection of assessments. Co-chairman Frank called for a show of hands on adoption of Amendment No. 39. The motion FAILED on a vote of 1 to 5 (Senator Donley was temporarily out of the committee room). AMENDMENT NO. 40 Senator Zharoff MOVED for adoption of Amendment No. 40. Co- chairman Halford OBJECTED. Senator Zharoff explained that it would restore $1.2 million in general fund program receipts to the Alaska Seafood Marketing Institute to alleviate need for ASMI to go to the Legislative Budget and Audit Committee to expend assessment funds. GUY BELL advised that ASMI has projected what will be collected in assessments over the next year. Much depends upon the price of fish, etc., and projected numbers are uncertain. The Senate subcommittee inserted intent requesting that ASMI come before LBA for additional authority if program receipts exceed the amount appropriated. ASMI is concerned that assessment proceeds not be used for purposes other than ASMI seafood marketing. If that were to occur, there would be problems maintaining self-imposed assessments and the salmon marketing tax. Senator Sharp said that was not the subcommittee intention. The $1.2 million reduction was based on projections of self-assessment totals. The subcommittee recognizes that additional assessment moneys are, by statute, strictly allocated to ASMI for promotional uses. That would be "basic and automatic approval by LBA." There is no intention of the money being used elsewhere. Senator Zharoff voiced concern that requests might encounter problems before Legislative Budget and Audit. He then asked if subcommittee intent is clear. Co-chairman Frank advised that the intent is clear. Further comments by Mr. Bell followed regarding subcommittee discussion of the $1.2 million, $860.0 in disputed tax, and the $200.0 in program receipts associated with Washington state staff. Additional discussion of the status of the offshore processing tax followed. Co-chairman Frank called for a show of hands on adoption of Amendment No. 40. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 41 Senator Zharoff MOVED for adoption of Amendment No. 41. OBJECTION was raised. Senator Zharoff explained that the amendment would restore $860,0 in general fund program receipts for administrative and legal appeal of the off- shore processor tax on behalf of the Alaska Seafood Marketing Institute. Co-chairman Frank called for a show of hands on adoption of Amendment No. 41. The motion FAILED on a vote of 1 to 6. AMENDMENT NO. 48 Senator Zharoff MOVED for adoption of Amendment No. 48, advising that it would restore $182.5 in general fund program receipts for federal program resale within the occupational safety and health component of the Dept. of Labor budget. ANNALEE McCONNELL added that state purchase of government materials for resale to Alaska employers would save employers 25% and would not cost the state general fund dollars. The program would be paid for strictly from program receipts. NANCY SLAGLE advised that the program has already received half-year funding from the Legislative Budget and Audit Committee. ARBE WILLIAMS told members there is no administrative cost associated with the program. Program receipts will reimburse the initial cost of purchasing materials. Senator Rieger declared a conflict, advising that he had a client who performed a similar service--sold federal regulations under concession from the federal government--in the private sector. Co-chairman Frank directed that Amendment No. 48 again be HELD for later consideration. [See page 59 of these minutes for subsequent action.] AMENDMENT NO. 49 Senator Phillips advised that he had no information on the amend-ment aside from the fact that the Adjutant General feels strongly about the issue. Senator Zharoff suggested that addition of $30.0 for rural veterans services remains a policy call for members. Co-chairman Frank called for a show of hands on adoption of Amendment No. 49. The motion FAILED on a vote of 1 to 4 (Senator Donley did not appear to vote, and Senator Rieger was temporarily out of the committee room). AMENDMENT NO. 80 Senator Donley noted that he had earlier been asked to revise language contained within Amendment No. 80. He then directed attention to Amendment No. 80, Revised, which reads: It is the intent of the legislature that the department shall prioritize and continue the enforcement of mandatory auto insurance and financial responsibility laws. He stressed that the intent is to continue these functions within the Dept. of Public Safety. Co-chairman Frank called for objections to adoption. No objection having been raised, Amendment No. 80, Revised, was ADOPTED. AMENDMENT NO. 85 Co-chairman Frank noted that the amendment had earlier been withdrawn. Senator Rieger said he wished to offer a portion of the intent language relating to the Public Broadcasting Endowment Trust. Rather than appropriate moneys to the trust, intent would request that the administration work with the trust to privatize public broadcasting in Alaska. Discussion centering on wording within the four paragraphs of intent followed. Senator Phillips advised that the first three paragraphs were included within the subcommittee report and previously adopted for inclusion within the budget. As a result of further discussion, Senator Rieger MOVED for adoption of only the first sentence of the last paragraph: The administration should work with the Public Broadcasting Endowment Trust to privatize public broadcasting in Alaska. Co-chairman Frank called for objections. No objection having been raised, the intent was ADOPTED. Senator Zharoff sought and was given assurance that remaining intent language could be added on the floor of the Senate or in conference committee. AMENDMENT NO. 94 Co-chairman Halford explained that Amendment No. 94 would reduce the Alaska Tourism Marketing Council by $300.0 in general funds. That brings the total to the House level. The House has a further unallocated reduction in program receipts. Co-chairman Frank noted that the subcommittee report for ATMC had not yet been adopted. Co-chairman Halford withdrew the foregoing amendment. [See the following discussion of the ATMC budget for action on Amendment No. 94.] DEPT. OF COMMERCE AND ECONOMIC DEVELOPMENT Senator Sharp MOVED for adoption of proposed subcommittee funding of $5,715.3 for the Alaska Tourism Marketing Council. Co-chairman Halford MOVED to amend the report by reducing general funds by $300.0 for a new total of $5,415.0. Senator Donley voiced concern that funding for the council had not been adequately discussed in that council funding was previously held open for consideration by the full committee. End: SFC-95, #47, Side 1 Begin: SFC-95, #47, Side 2 Co-chairman Frank announced that discussion would now commence. Co-chairman Halford noted House funding of $5,492.9. Senator Phillips indicated he had a problem with the $700.0 increase contained in proposed Senate funding. Senator Rieger voiced support for Co-chairman Halford's amendment. He noted many areas within the budget where fees, program receipts, and private non-state funds are providing greater portions of the budget. Tourism stands out as the industry that has not come to the table with a proposal for generation of self-supporting program receipts. Senator Phillips MOVED to amend the amendment and reduce ATMC funding by $1 million. He cited the same rationale voiced by Senator Rieger as support for a greater reduction. ANNALEE McCONNELL cautioned that a $1 million reduction would fund the council at $4.7 million. That would be $200.0 less than the FY 95 level. Senator Sharp attested to past overstatement of program receipts by $277.6. The net FY 96 increase was thus $700.0 rather than $1 million. Mrs. McConnell advised that the FY 95 authorized level was $4,992.9. Senator Phillips withdrew his amendment for a $1 million reduction and instead MOVED to fund ATMC at the FY 95 authorized level. Co-chairman Frank clarified that the subcommittee recommendation reduced excess program receipts by approximately $200.0. The number proposed by Co-chairman Halford in the main motion would be a reduction of $1.3 million from the Governor's request and an increase of $700.0 from last year's funding less the excess program receipts. It would thus result in an increase of $400.0 plus. Co-chairman Frank called for a show of hands on the amendment to the amendment. (Senator Phillips's motion for FY 95 authorized funding of $4,992.9.) The motion FAILED on a vote of 1 to 6. Co-chairman Frank called for a show of hands on Co-chairman Halford's motion amending ATMC funding to $5,415.0. The motion CARRIED on a vote of 4 to 3. [NOTE - ATMC funding at $5,415.0 effectively adopted Amendment No. 94.] AMENDMENT NO. 47 Senator Donley MOVED to reconsider the committee decision on funding for occupational safety and health within the Dept. of Labor budget. He voiced his understanding that the only reason funding was cut was to meet the cap. He stressed that the cap should be a goal rather than an "end all, be all." Senator Donley noted that additional funding had been provided for "things that are, frankly, a lot less important than the safety of workers." Without restoration of the $276.4, there will be no enforcement of state safety laws or flexibility in dealing with the House at conference committee. Senator Donley next MOVED to add half, $138.2, of the original request to the budget of occupational safety and health. Co-chairman Frank called for a show of hands on adoption of Amendment No. 47, as amended. The motion FAILED on a vote of 2 to 5. AMENDMENT NO. 88 Co-chairman Halford formally MOVED to withdraw Amendment No. 88 since it was similar to earlier adopted Amendment No. 46 (pages 26-27). AMENDMENT NO. 48 Attention reverted to Amendment No. 48. Co-chairman Frank noted that the amendment would restore $182.5 to the occupational safety and health component within the Dept. of Labor budget. Funding would continue purchase of federal regulations for resale to Alaska employers. Senator Zharoff stressed that the impact of the restoration would be zero in that the service generates program receipts to reimburse purchase expenditures. The effort is also supportive of state industry. Co-chairman Frank called for a show of hands on adoption of Amendment No. 48. The motion FAILED on a vote of 2 to 5. DEPT. OF LABOR Co-chairman Frank advised that the subcommittee recommendation for the Dept. of Labor budget was held open at a prior meeting. Senator Randy Phillips MOVED for adoption. Senator Donley OBJECTED. He voiced his belief that it would be a serious mistake not to provide funding for enforcement of state safety laws. The House also failed to provide funding for enforcement of current statutes. Senator Zharoff concurred in Senator Donley's concern. He voiced further concern regarding state liability should it fail to protect Alaskan workers. Co-chairman Frank called for a show of hands on adoption of the subcommittee budget for the Dept. of Labor. The motion CARRIED on a vote of 5 to 2. FRONT SECTIONS MIKE GREANY, Director, Legislative Finance Division, directed attention to a work draft SCS for CSHB 100 (Fin) (9-GH0022\R, Cramer, 4/19/95), containing provisions for the front section of the budget, and provided the following review: Sec. 1 sets forth amounts from the highway fuel tax account and the aviation fuel tax account, earmarked for the budget. This is boilerplate language that appears each year. Sec. 2 contains boilerplate language relating to use of federal funds beyond those specifically appropriated in the budget. This section was amended by adoption of Amendment No. 10, which limits appropriations from the fish and game fund to stated amounts. Sec. 3 contains boilerplate language appearing in the budget every year. It allows for reduction of state general funds in instances where more federal moneys are received than anticipated, as long as the reduction is consistent with federal statutes. Sec. 4 sets forth boilerplate language calling for reduction of appropriations if federal funds fall short of the estimate. Sec. 5 contains boilerplate language. Both House and Senate budgets cap the amount of the shortfall that can derive from the general fund for Title XX (Social Security Act) at $6,310,800. In response to a question from Senator Rieger, Mr. Greany explained that funding relates to a component in the Dept. of Health and Social Services budget. Sec. 6 contains boilerplate language relating to the state insurance catastrophe reserve account and settlement of claims against bonds guaranteeing the reclamation of state land. Sec. 7 contains boilerplate language relating to payment of interest on revenue anticipation notes. Sec. 8 contains boilerplate language relating to principal and interest on outstanding state-guaranteed bonds. Senator Rieger asked if the term "state-guaranteed bonds" rather than "general obligation bonds" was traditionally used. Mr. Greany nodded affirmatively. Sec. 9 language relates to debt service including revenue bonds for airports. Sec. 10 relates to lease debt. Subsection (b) specifies lease payments for Alaska Housing Finance Corporation, City of Seward, City of Kenai, the Dept. of Natural Resources, and the Alaska Court System. Sec. 11 relates to general obligation debt. Mr. Greany noted that amounts set forth in Secs. 10 and 11 reflect identical Governor, House, and Senate numbers. Sec. 12 contains traditional language providing for payment of dividends from the permanent fund. Sec. 13 sets forth new language providing $2,703,700 from the dividend fund to the Dept. of Corrections, per SB 135. Sec. 14 contains traditional language relating to inflation proofing of the permanent fund. Sec. 15 contains traditional language relating to appropriation of interest to the permanent fund. Sec. 16 appropriates amounts required to be deposited under AS 37.12.010(a)(1) and (2) to the principal of the permanent fund. Sec. 17 provides for return of left-over STEP funds to the unemployment compensation fund to satisfy federal requirements. Sec. 18 subsections (a) through (e) are similar to language in prior years appropriating AHFC moneys to the corporation for use per current statutes. Subsection (d) contains a $70 million transfer of funds from AHFC to the general fund. Subsection (e) makes provisions of (a) through (c) subject to Legislative Budget and Audit Committee review through the revised program process. Sec. 19 appropriates $9,000,000 in federal receipts to the disaster relief fund. The Senate bill funds disaster relief entirely from federal moneys. Mr. Greany noted that Amendment No. 50 (not yet acted upon by committee (page 30)) contains intent language relating to supplemental funding for disaster relief. Sec. 20 appropriates tank registration fees to the storage tank assistance fund. Sec. 21 deals with the mitigation account. It appropriates a specific sum of $3,591,300 to the storage tank assistance fund. The balance will flow to the oil and hazardous substance release prevention response fund. Sec. 22 deals with the mitigation fund account. Secs. 23 and 24 appropriate amounts from the surcharge to the oil and hazardous substance release response account and the oil and hazardous substance release prevention account. The $4,015,100 and $9,875,700 respectively set forth are identical to amounts provided in the House budget but lower than requested by the Governor. That is because the surcharge limit was reached, and the state will henceforth only collect the 3-cent portion. Sec. 25 contains a $21,860,400 appropriation for the information services fund in the Dept. of Administration. Funding covers computer and telecommunication services. This section will need to be conformed to individual budget items in agencies. The foregoing number reflects subcommittee action and amendments to date. Sec. 26 contains a $20,000,000 appropriation for oil and gas revenue cases to the Dept. of Law. It differs slightly from the House budget in that the House effected a 75/25 split between constitutional budget reserve funding and permanent fund corporation receipts. Senate funding reflects Dept. of Law advice on the current level of activity between funding sources and recipients of services. Sec. 27 appropriates $80,322,400 for school debt retirement. That is the amount proposed by the Governor and included by the House. Sec. 28 contains language that has appeared in previous years. It allows for program receipts for the Governor's safety conference. In collecting fees, the conference straddles fiscal years. Language is included so that moneys do not lapse. Sec. 29 contains boilerplate language appropriating moneys from the real estate surety fund to pay claims awarded under AS 08.88.470. Sec. 30 allows program receipts for the Alaska Public Utilities Commission to be carried forward into FY 96. The commission will thus not have to charge as much in FY 96 as it would have had it not been allowed to carry forward the lapse. Sec. 31 extends the lapse of Alaska Seafood Marketing Institute receipts. Sec. 32 contains a $28,006,600 appropriation from the general fund to the marine highway system fund to continue stable services to the public. It reflects all actions to date (both the subcommittee report and subsequent amendments). Sec. 33 provides funding from the four dam pool transfer fund to the three receiving funds. Mr. Greany noted an issue raised by the recent filing of a lawsuit to use moneys coming from utilities in the four dam pool to effect repairs to failing power lines and other needs. If that suit were to prevail, funds earmarked for this particular section would not be available. He further noted a $20 million capital budget request as an alternative to four dam pool use of the revenue flow to effect repairs. Sec. 34 contains the single $9,097,800 appropriation for the Alaska clean water loan program. This is the same amount requested by the Governor and included in the House budget. Sec. 35 contains annual language needed to make the appropriation for shared taxes. Sec. 36 makes the appropriation for the salmon enhancement tax. Sec. 37 provides $250,000 to satisfy the monetary terms of the collective bargaining agreement between the state and the Public Safety Employees Association. It funds the second year of an in-effect, in-force agreement. Funding was also provided in the House budget. Sec. 38 sets forth language included by the House. It says that failure to provide a separate appropriation to fund monetary terms nullifies those agreements. Sec. 39 addresses the Constitutional Budget Reserve sweep. It provides that any funds swept into the CBR at the close of FY 95 would be restored to the funds from which they were swept. Sec. 40 speaks to use of available balances in the statutory budget reserve to fund shortfalls in FY 96 appropriations. The estimated amount that may be available is approximately $45 million. The source of those funds will be moneys from the investment loss trust fund, Executive Life repayment. This provision was established in FY 90 or 91 when appropriations were made to the investment loss trust fund. The appropriations specified that moneys be prorated and returned back to the funds from which appropriated (the general fund and the statutory budget reserve). Sec. 41 requires that remaining funds needed to balance the budget would derive from the Constitutional Budget Reserve. The section contains language saying that if a three-fourths vote is garnered, withdrawal will be under sec. 17(c). If the three-fourths vote is not achieved, withdrawal will occur under sec. 17(b). Sec. 42 sets forth language included in the House version of the budget. It relates to control of expenditures by the office of management and budget to minimize need to draw upon the Constitutional Budget Reserve. Sec. 43 specifies non-lapsing sections. Mr. Greany noted that Amendments 11 (pages 8-9), 12 (pages 9-10), and 17 (pages 11-12) contain new sections to be incorporated within the present work draft of front section appropriations. Co-chairman Halford MOVED and requested unanimous consent for adoption of the "R" draft as the working document for the front section of SCS CSHB 100 (Fin). Senator Phillips advised that he had a problem with Sec 41. Senator Donley formally OBJECTED, saying that he did not want there to be any question about his opposition to some of the content of the budget. Senator Phillips voiced his understanding of Sec. 41 to be that the state would take moneys from the Constitutional Budget Reserve account to cover the difference between expenditures and normal revenues. Mr. Greany concurred. Senator Donley advised that his primary area of concern is the $70 million appropriation from the Alaska Housing Finance Corporation. He said that the Governor negotiated a reasonable response through a recurring dividend. He voiced further concern regarding Sec. 38 rejection of collective bargaining agreements and Sec 41 funding from the Constitutional Budget Reserve fund. Mr. Greany advised that the $70 appropriation from AHFC was included in Governor Knowles amended budget. Annalee McConnell voiced concern regarding a proposed amendment that would change the amount of the appropriation to $110 million. The administration is supportive of the $70 million appropriation but not of an increase. Senator Phillips MOVED to remove Sec. 41 from the bill. Prior to action on Senator Phillips' motion, Co-chairman Frank called for a show of hands on the main motion for adoption of SCS CSHB 100 (Fin), version "R," as a working document. The motion CARRIED on a vote of 5 to 2. Senator Phillips replaced his MOTION to remove Sec. 41 from the bill. Co-chairman Frank OBJECTED. Senator Phillips advised that the Constitutional Budget Reserve has no constituency aside from the Finance Committee. He said he had a problem tapping into a fund established by voters with a 70% majority. Annalee McConnell sought clarification of Sec. 41 provisions relating to the three-quarter versus majority vote. Co-chairman Frank acknowledged that the Legislative Finance Division had prepared calculations regarding what would be available under secs. 17(b) and 17(c). He voiced a preference for a three-quarters vote. Mrs. McConnell concurred, advising that the intention behind establishment of the fund was procurement of a three- quarters vote. Co-chairman Frank called for a show of hands on removal of Sec. 41. The motion FAILED on a vote of 2 to 4. (Senators Donley and Phillips voted in support of the motion.) End: SFC-95, #47, Side 2 Begin: SFC-95, #49, Side 1 AMENDMENT NO. 90 Senator Rieger directed attention to Amendment No. 90 and explained that it contains a technical change to Amendment No. 11. It relates to extension of the lapse or reappropriation of grants and payments of claims for the Violent Crimes Compensation Board and the Council on Domestic Violence and Sexual Assault as well as amounts accruing to the board and council from day-fine receipts. No objection having been raised, Amendment No. 90 was ADOPTED. CONSTITUTIONAL BUDGET RESERVE Senator Zharoff asked that figures relating to Constitutional Budget Reserves funding with and without the three-quarters vote be made available. Co-chairman Frank directed that the meeting be briefly recessed. RECESS - 2:10 A.M. RECONVENE - 2:25 A.M. MIKE GREANY, again came before committee to speak to a handout (copy attached to these minutes) entitled "Estimate of Funds Available for Appropriation for FY 96." He explained that the tabulation was designed to show what would be available under sec. 17(b), if there were $100 million left in the earnings reserve of the permanent fund. Of the two variables involved in use of the 17(b) provision, the biggest is the disposition of the earnings reserve of the permanent fund. As long as the earnings reserve remains in tact (estimated amount: $1.1 or $1.2 billion), 17(b) would not come into play. If something similar to SB 84 were to pass, appropriating some portion or all of the earnings reserve to the corpus, 17(b) would become effective. The other variable is overall spending. While a major portion is contained within HB 100, education funding is within a separate vehicle, and the capital budget is in another. All those appropriations would also play into the calculation. Without an appropriation from earnings reserve to the corpus, the amount available for appropriation would far exceed the difference between last year's expenditures and this year's available funds, and 17(b) provisions would not be activated. Discussion followed concerning what might happen should the Constitutional Budget Reserve be tapped via a majority vote and SB 84 fail to pass the legislature or fall victim to veto. In response to a further question from Senator Zharoff, Mr. Greany reiterated that should "something similar to SB 84" pass the legislature, be signed by the Governor, and leave a balance of approximately $100 million in the earnings reserve of the permanent fund, assumed expenditure levels and Legislative Finance calculations suggest that approximately $423 million could be accessed from the Constitutional Budget Reserve by a simple majority under subsection 17(b). Mr. Greany cautioned that both assumptions and calculations are speculative. Co-chairman Frank directed attention to proposed amendments to the front section of the budget. AMENDMENT NO. 96 Co-chairman Halford MOVED for adoption of Amendment No. 96. Senator Zharoff OBJECTED for the purpose of explanation. Co-chairman Halford advised that the amendment would appropriate $1.6 of the $1.9 million in the oil and hazardous substance release prevention mitigation account to the Dept. of Community and Regional Affairs for grants for the bulk fuel system repair and upgrade program. He referenced state liability and noted need to work on upgrade of facilities. The budget contains $3.5 million for leaking underground storage tanks. This program is a component of the same problem. Senator Phillips asked if general funds are involved. Co-chairman Halford responded negatively, saying that the proposed appropriation flows from the same funding source used for the underground storage tank program. MIKE GREANY again came before committee. He explained that while the moneys are counted as general funds, rather than appropriation to the response fund, these moneys would flow to the bulk fuel program. The net effect would be zero. Co-chairman Halford observed that while the program is not funded in the House budget, it has been funded in the past and is an ongoing program. The appropriation would not add to the general fund total of the budget because existing budget language (Sec. 21) appropriates the moneys elsewhere. Senator Donley voiced ongoing concern regarding underground storage tanks, suggesting that local communities should take care of the problem. While the proposed amendment represents a logical step, it has a downside as well. Co-chairman Frank called for further questions or objections to the amendment. No objection having been raised, Amendment No. 96 was ADOPTED. AMENDMENT NO. 97 Co-chairman Frank explained that the amendment would withdraw $17,000,000 in unrestricted cash from the Alaska Industrial Development and Export Authority (AIDEA) for transfer to the general fund. It would also appropriate $8 million from the group health and life benefits fund to the general fund. NANCY SLAGLE, said that similar language was introduced last year. It was eventually changed and subsequently vetoed by the Governor. She acknowledged that more than $8 million in the group health and life benefits fund was identified as available for use. The administration attempted to use that funding to cover costs of health benefits for employees. Moneys flowing to the fund accrue from many areas. They are not simply general funds. The administration has concerns over the proposal to return it to the general fund for purposes other than employee benefits. Senator Donley concurred in that concern. He spoke against an across-the-board "attack" on health benefits, noting that it would equally impact both low and high paid employees. Ms. Slagle said she could make no recommendations on what is and is not available from the fund. Speaking to the proposed $17 million transfer from AIDEA, ANNALEE McCONNELL noted that AIDEA is a source of funds for "a whole host of economic development projects" many of which are being put together at this time. The administration would not support use of AIDEA funds. Senator Donley remarked that Amendment No. 97 contains "really big issues" that should not be brought on for discussion at 3:00 a.m. when the public has little opportunity for input. Co-chairman Frank suggested that the question of adoption of the two proposals within Amendment No. 97 be divided. Referencing the $17 million appropriation from AIDEA, the Co-chairman noted that the legislature had withdrawn moneys from the authority in previous years. Should it later be determined that the funding is not available, the conference committee could "back away from this appropriation." Senator Rieger MOVED to divide the question. Co-chairman Frank called for a show of hands on the $17 million transfer from AIDEA. The proposal was ADOPTED on a vote of 5 to 2. At the request of Co-chairman Frank, Co-chairman Halford MOVED to withdraw the proposed $8 million appropriation from the group health and life benefits fund. No objection having been raised, IT WAS SO ORDERED. Co-chairman Frank directed that the meeting be briefly recessed. RECESS - 2:55 A.M. RECONVENE - 3:05 A.M. Upon reconvening the meeting, Co-chairman Frank announced that the meeting would be recessed at this time and reconvened at approximately 11:00 a.m. RECESS The meeting was recessed at approximately 3:10 a.m.