SENATE BILL NO. 184 "An Act making supplemental appropriations, capital appropriations, and other appropriations; amending appropriations; repealing appropriations; making appropriations to capitalize funds; and providing for an effective date." 9:05:00 AM Co-Chair Hoffman stated that capital budget items in the supplemental budget would not be discussed during the meeting. 9:05:16 AM KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, stated that the bill totaled approximately $97 million, of which $78.5 million was unrestricted general funds. She said that the agency operating supplementals that were included in the request totaled $38.9 million, of which $30.4 million was general funds and included: fire suppression, disaster relief, and formula requests under the adult public assistance program. She stated that there were two significant settlements included in the bill totaling $38 million: the University of Alaska's Optional Retirement Plan settlement for $20 million and the Moore v. State case settlement for $18 million. She explained that the bill contained 18 sections. Sections 1 and 2 contained the operating numbers, Sections 3 through 5 were the capital numbers; the language section of the bill began in Section 6. 9:07:02 AM Ms. Rehfeld read the requests listed on the FY12 supplemental requests spreadsheet: Administration Office of Public Advocacy Operational Costs for Caseload Increases Projections are based upon actual expenditures for the first half of FY2012 and comparisons to prior year expenditures. In FY2011, OPA received a supplemental in the amount of $900.0. The impact of this request is being considered for a FY2013 budget amendment. $800.0 - General Fund Administration Public Defenders Agency Operational Costs for Caseload Increases In FY2011 the agency experienced a budget shortfall of $300.0 which was covered by a supplemental. Projections are based upon actual expenditures for the first half of FY2012 and comparisons to prior year expenditures. The impact of this request is being considered for a FY2013 budget amendment. $1,000.0 - General Fund Commerce Alaska Industrial Development and Export Authority Increased Costs for Financing Tools Increased costs for developing tools for financing major economic development infrastructure (industrial roads and ports) to support natural resource development in Alaska. This is a one-time item. $150.0 - AIDEA Receipts Commerce Corporations, Business and Professional Licensing Support for Board and Commission Members This increase provides funding support for volunteer boards and commissions members to stay current on issues, trends and policies impacting their professions and to maintain the quality licensing standards. A $244.6 increment is in the FY2013 Governor's budget. $244.6 - Receipt Supported Services Commerce Corporations, Businesses and Professional Licensing Business Licensing and Corporations Indirect Costs Increase general fund program receipts to correctly charge indirect costs related to the Business Licensing and Corporations program. A $250.0 increment is in the FY2013 Governor's budget $250.0 - General Fund Program Receipts Commerce Corporations, Businesses and Professional Licensing Adjustment for Licensing Fees Fund source change from professional licensing receipts (receipt supported services) tot eh general fund to reimburse the professions for historical indirect cost overpayments that were associated with the Business License and Corporations programs. This is a one-time funding change. $3,439.8 - General Fund - Receipt Supported Services Commerce Corporations, Businesses and Professional Licensing Implementation of Audit Recommendations Increase receipt supported services to address audit findings on cost allocations to division programs and for remediation of the investigations system. This is a one-time item. $250.0 - Receipt Supported Services 9:09:52 AM Ms. Rehfeld continued with her presentation of the supplemental requests: Corrections Inmate Transportation Increased Inmate Transportation Costs The Department of Corrections has experienced an increase in the costs within the Inmate Transportation Unit due to in-state and out-of-state prisoner transports associated with population management. The average daily in-state offender population from July 1, 2011 through December 31, 2011 was 3,851 with an additional 1,050 offenders housed out-of-state. The maximum capacity of the in-state institutions is 3,840. The average daily population continually exceeds the maximum capacity creating the need for offenders to be transported between facilities in order to manage the inmate population. This is a one- time item. $867.4 - General Fund Corrections Community Jails Additional funding id necessary to cover operating costs of the 15 community jails based on financial reports provided to the Department of Corrections. The department is currently evaluating the costs and revising the methodology for funding community jails for consideration as a FY2012 budget amendment. $600.0 - General Fund Education and Early Childhood Development Student and School Achievement Comprehensive System of Student Assessment Contractual Costs This Additional funding is needed to accommodate the negotiated contract for the Comprehensive System of Student Assessments. The FY2013 Governor's budget includes an additional $750.0 for modified contract items. $1,000.0 - General Fund Health and Social Services Medical Assistance Administration Continued work on Health Information Portability and Accountability Act (HIPAA) Version 5010 Project Additional authority for federally mandated implementation of version 5010 medical care transactions and code sets. This is a one-time item. $80.0 - General Fund $720.0 - Federal Receipts Health and Social Services McLaughlin Youth Center Increased Medical Costs for Juvenile Justice System Youth Statutorily required medical services for youth within the Juvenile Justice facilities - will be reallocated via revised programs throughout the DJJ facilities. This is a one-time item. $627.5 - General Fund Health and Social Services Alaska Temporary Assistance Program ARRA Emergency Funding for Temporary Assistance for Needy Families (TANF) Program Revenues made available due to an increase in the Alaska TANF caseload. The division plans to invest in these TANF emergency funds in work and job readiness activities and opportunities for engagement in work activities. This is a one-time item. $1,100.6 - 1212 Federal ARRA Health and Social Services Adult Public Assistance Adult Public Assistance Caseload Growth Increased program enrollment, particularly in the disabled and bling category - tied to the dramatic growth in the Alaska senior population. A $6,075.0 increment is included in the FY2013 Governor's budget. $2,600.0 - General Fund Health and Social Services Energy Assistance Program Low Income Home Energy Assistance Program (LIHEAP) and Alaska Affordable Heating Program for the State Based on projected needs. The impact of this supplemental request is being considered for a FY2013 budget amendment. $928.7 - General Fund Health and Social Services Energy Assistance Program Low Income Home Energy Assistance Program (LIHEAP) and Alaska Affordable Heating Program for Tribes Based on projected needs. The impact of this supplemental request is being considered for a FY2013 budget amendment. $1,691.6 - General Fund 9:12:21 AM Co-Chair Hoffman queried when the latest assessment of need had been conducted. Ms. Rehfeld responded that the numbers had been provided upon the introduction of the supplemental bill on the 15th day of the current legislative session. She said that the department was in the process of reviewing the numbers and could provide updates at a later date. Ms. Rehfeld continued with her presentation of the supplemental requests: Health and Social Services Women, Children and Family Health Increase in Demand for Clinics for Newborn Screening Greater volume of screenings provided will generate additional general fund program receipts. The impact of this supplemental request is being considered for a FY2013 budget amendment. $350.0 - General Fund Program Receipts Health and Social Services Chronic Disease Prevention/Health Promotion Reinstate American Recovery and Reinvestment Act (ARRA) Authority - Tobacco, Obesity and Diabetes Programs Restore FY2012 federal authority for this program, which was deleted earlier due to an indication that federal revenues would be withdrawn. Funding has been extended through FY2012. This is a one-time item. $140.0 - Federal ARRA Health and Social Services Epidemiology Reinstate American Recovery and Reinvestment Act (ARRA) Authority - Health Assessment and Children's Immunizations Restore FY2012 federal authority for this program, which was deleted earlier due to an indication that the federal revenues would be withdrawn. Funding has been extended through FY2012. This is a one-time item. $30.0 - Federal ARRA Health and Social Services Senior and Disabilities Services Administration Third Party Review of Home and Community Based Medicaid Waiver Denials Increased federal authority for review of eligibility decisions that remove clients from waivered services, based on a recent one- time federal grant for review of all denials. This is a one-time item. $250.0 - Federal Receipts Labor Worker's Compensation Benefits Guaranty Fund Increase Workers' Compensation Benefits Guaranty Fund Authority to Increased Legal Costs An increase in Worker's Compensation Benefit Guaranty Fund authorization is required to support the component's legal representation provided by the Department of Law. The recent legal decision, Charles West v. State of Alaska, Benefit Guaranty Fund (Decision No. 145, January 20, 2011), has resulted in an increase in the number of claims requiring legal representation for the Fund. The impact of this supplemental request is being considered for a FY2013 budget amendment. $168.0 - Workers' Compensation Benefits Guaranty Fund Labor Alaska Vocational Technical Center Replace Unrealized Program Receipts This fund source change replaces unrealizable general fund program receipts with general funds to support increased operating expenses for existing programs. AVTEC's expenses have grown considerably due to the higher cost of goods and services. This $250.0 fund change is included in the FY2013 Governor's budget. $250.0 - General Fund - General Fund Program Receipts Law Oil, Gas and Mining Oil and Gas Outside Council Increased litigation costs for oil and gas outside council attributable to three types of cases: tariff proceedings; Trans Alaska Pipeline System (TAPS) property tax proceedings; and oil and gas royalty issues. An increment of $6,150.0 is included in the FY2013 Governor's budget and is based on anticipated caseload. $3,116.0 - General Fund Law Transportation Section Fast Ferry Litigation In FY2011, the department had $200,000 appropriated for the fast ferry litigation. Last year's activity however exceeded the $200,000 and the department covered $19,789 while the Department of Transportation paid an additional $109,480. Total expenditures associated with the fast ferry lawsuit to date are $569,955 (including $21,605 form FY2012). In FY2012 YTD, $219,081 has been expended and it is anticipated to ramp up because outside counsel has been obtained and discovery activity will pick up. An increment of $600.0 is included in the FY2013 Governor's budget. $600.0 - General Fund Military and Veterans Affairs Office of the Commissioner Base Realignment and Closure Commission Impact Department of Defense Secretary Leon Panetta had announced that the plan to cut nearly $500 billion in the next 10 years from the Department of Defense budget will impact all 50 states and a Base Realignment and Closure Commission (BRAC) will be requested of Congress to address facility reductions as soon as possible. The U.S. military's presence in Alaska represents 10 percent of the state's economy. The Alaska Military Force Advocacy and Structure Team (AMFAST) recommends the State of Alaska hire an experienced consulting group to address ideas proposed by the next BRAC. This request will promote and sustain Alaska's current military facilities and force structure. The impact of this request is being considered for a FY2013 budget amendment. $300.0 - General Fund 9:16:10 AM Ms. Rehfeld continued with her presentation of the supplemental requests: Military and Veterans Affairs Army Guard Facilities Maintenance State Match Requirement Change at Kodiak, Ketchikan, and Kenai Armories The federal/state funding ratios for armory operations in Kodiak, Ketchikan, and Kenai have changed due to federal regulations regarding funding and armory use. The impact of this request is being considered for a FY2013 budget amendment. $97.3 - General Fund Match - Federal Receipts Military and Veterans Affairs Army Guard Facilities Maintenance Bethel Armory Operations Operating funds for the new Bethel Armory starting December 2011. The impact of this request is being considered for a FY2013 budget amendment. $94.6 - General Fund Military and Veterans Affairs Air Guard Facilities Maintenance Eielson Air Force Base Electrical Usage Calculation Correction Eielson Air Force Base discovered an error in the method used to calculate that Alaska Air National Guard electrical usage for the 168th Wing. Funding is requested for the increase to the annual cost of electricity. The impact of this request is being considered for an FY2013 budget amendment. $26.3 - General Fund $78.8 - Federal Receipts Military and Veterans Affairs Veteran's Services Reduce Unrealizable Federal Funds The U.S. Department of Veterans' Affairs (VA) no longer distributes federal funding to administer the State Approving Agency (SAA) grant for Veteran's Educational Programs (GI Bill). This change is reflected in the FY2013 Governor's budget. $(95.8) - Federal Receipts Military and Veterans Affairs Veteran's Services State Approving Agency Program Continuation The U.S. Department of Veterans' Affairs (VA) no longer distributes federal funding to administer the State Approving Agency (SAA) grant for Veteran's Educational Programs (GI Bill). This change is reflected in the FY2013 Governor's budget. $95.8 - General Fund Military and Veterans Affairs Veterans' Services Interior Alaska Veterans Cemetery Position A vacant position will be transferred to the Veterans' Services Office to provide additional project planning and coordination. The impact of this request is being considered for a FY2013 budget amendment. $41.3 - General Fund Natural Resources Project Management and Permitting Wishbone Hill Coal Project Rapid Health Impact Assessment A Rapid Health Impact Assessment will be conducted in conjunction with the permit renewal process. This is a one-time item. $39.2 - General Fund Natural Resources Mining, Land and Water Dam Safety Review - Red Dog Mine The Dam Safety and Construction Unit (Dam Safety) is expecting to receive a large statutory designated program receipt (SDPR) in an application fee required under 11 AAC 93.171 for the construction and modification of dams for the expansion of the tailings storage facility at the Red Dog Mine in northwest Alaska. The impact of this request is being considered for a FY2012 budget amendment. $66.5 - Statutory Designated Program Receipts Natural Resources Mining, Land and Water Offshore Lease Sales at Nome This request provides funding for securing a monitoring contractor for offshore lease sales at Nome to be trained and in place when the ice goes out at Nome (early to mid -June 2012). This is reflected in the FY2012 Governor's budget. $18.6 - General Fund Program Receipts Natural Resources Fire Suppression Activity FY2012 Fire Suppression Activity This is a preliminary estimate of supplemental needs for spring firefighting and costs of initial attack of wildland fires through June 30, 2012. $4,892.5 - General Fund Public Safety AST Detachments 24-Hour Dispatch and Prisoner Transport Services in the City of Kotzebue The Department of Public Safety currently contracts with the City of Kotzebue to provide 24-hour dispatch services and for local transport of prisoners to and from court. The city has historically provided these services to the state at no cost and is no longer willing to do that. These services are required and there are no practical alternatives for the Department of Public Safety. The impact of this supplemental request is being considered doe a FY2013 budget amendment. $75.0 - General Fund 9:19:19 AM Ms. Rehfeld continued to highlight the FY 12 supplemental requests: Public Safety ATS Detachments City of Kotzebue Jail Closure Transportation Coasts Temporary funding is necessary for prisoner transport between Kotzebue and Nome during closure of the Kotzebue jail. This assumes the jail re-opens on or about February 1, 2012. Amounts are based on December, 2011 actual costs of $47.0, with an increase in January assuming some transition into the jail re- opening. Personal services costs are only for overtime, not for already budgeted personal services costs. This is a one-time item. $106.0 - General Fund Public Safety AST Detachments Replace Federal Pass Thorough Funds from Alaska Highway Safety Office The Alaska Bureau of Highway Patrol will no longer receive federal funds for non-DUI related traffic enforcement. In order to maintain traffic enforcement to include non-DUI specific activity, such as impaired driving, youth drivers, aggressive driving and speeding, and seat belt enforcement, supplemental funding is necessary as the current budget cannot absorb these costs. Additional federal funding reductions are anticipated for DUI-related traffic enforcement starting in FY2014. The impact of this supplemental request is being considered for a FY2013 budget amendment. $1,900.0 - General Fund Public Safety Alaska Criminal Records and ID Maintain Current Level of Services The Criminal Records and Identification Bureau (R&I) does not have adequate general funds in the FY2012 operating budget to maintain current services without taking cost containment measures that will impact public services and the timely availability of law enforcement information. The impact of this request is being considered for a FY2013 budget amendment. $200.0 - General Fund Revenue Tax Division Litigation Support for Corporate Income Tax Litigation expenses are anticipated to generate a budget shortfall in the first part of FY2012. The Department is involved in two cases requiring expert witnesses that were unanticipated. The funds for the expert witnesses will be paid through a reimbursable service agreement to the Department of Law. This is a one-time item. $150.0 - General Fund Revenue Treasury Division Investment Management of Power Cost Equalization Endowment Fund The investment management costs for the Power Cost Equalization Endowment Fund (PCE) have increased due to a $400 million deposit made in FY2011. The amount requested will cover the costs for the remainder of FY2012. An increment of $80.4 is included in the FY2012 Governor's budget. $58.0 - Power Cost Equalization Endowment Transportation and Public Facilities State Equipment Fleet Credit Card Fuel Program Authorization to cover projected increases in expenditures related to the credit card fuel program. A $1,110.0 increase is included in the FY2013 Governor's budget. $850.0 - Highway Working Capital Fund Transportation and Public Facilities Central Region Facilities Snow Removal Costs Due to an early and heavy snow season, Central Region Facilities has exhausted the snow removal budget in November and December. Also, additional snow hauling services have been incurred within the Tudor Complex. There is no longer adequate space to stockpile snow, so all snow must be hauled to the contractor's snow dump throughout the winter. This is a one-time line item. $85.0 - General Fund Transportation and Public Facilities Central Highways and Aviation New Insurance Requirements for Rural Airport Maintenance Contracts A recent change in how rural contractors were covered under the State's accident umbrella. All airport maintenance contracts are now required to be insured. An increment of $356.3 is included in the FY2013 Governor's budget. $102.4 - General Fund 9:22:16 AM Transportation and Public Facilities Central Highways and Aviation Anchorage Snow Removal Costs Snowfall in the Anchorage area this year is significantly higher than considered normal for the area. The recent heavy snowstorms and near record snow accumulation in November and December has resulted in unanticipated hauling costs to remove excess snow plowed from the roads onto the shoulders and sidewalk areas. This is a one-time item. $200.0 - General Fund 9:22:30 AM Transportation and Public Facilities Northern Highways and Aviation New Insurance Requirements for Rural Airport Maintenance Contracts A recent change in how rural contractors were covered under the State's accident umbrella. All airport maintenance contracts are now required to be insured. An increment of $423.6 is included in the FY2013 Governor's budget. $120.1 - General Fund Transportation and Public Facilities Southeast Highways and Aviation Winter Commodities - Sand and Ice Control Chemicals High snowfall and cold temperatures throughout Southeast Region in November and December have required heavier than normal sand and ice control chemical use to keep highways and airports safe. Due to stock depletion, large quantities of ice control chemicals were reordered in mid-winter. This is a one- time line item. $257.0 - General Fund Transportation and Public Facilities Whittier Access and Tunnel Whittier Tunnel Reduced Revenue Toll Collections The majority of Whittier Access and Tunnel's funding is based on revenue collections from the tunnel tolls. Reduced travel through the tunnel and reduced cruise ship dockings has resulted in a decrease in toll collections. In addition to increased costs, toll revenues have declined over the past few years due to economic conditions, reduced cruise ship dockings, and increased fuel prices. An increment of $192.9 is included in the Governor's FY2013 budget. $229.8 - General Fund 9:23:09 AM Ms. Rehfeld continued to highlight the FY 12 supplemental requests: Transportation and Public Facilities Anchorage Airport Facilities Utilities and Building Maintenance for Kulis Air National Guard Base In September 2011, the Anchorage Airport acquired the management of the Kulis Air National Guard Base property back from the U.S. Department of Defense. Building maintenance and property upkeep is now the responsibility of the Anchorage Airport. An increment of $750.0 (IARF) is included in the Governor's FY2013 budget. $625.0 - International Airport Revenue Fund Transportation and Public Facilities AIA Field and Equipment Maintenance Purchase De-icing Chemicals In FY2011, the cost per ton of urea increased from $342 per ton to $719 per ton. Also, the airport has commissioned a third new tank for potassium acetate in order to mitigate continuing supply shortages. An increment of $1,634.5 has been included in the FY2013 Governor's budget. $1,634.5 - International Airport Revenue Fund Transportation and Public Facilities AIA Field and Equipment Maintenance Property Maintenance for Kulis Air National Guard Base Student Allocation (BSA) In September 2011, the Anchorage Airport acquired the management of the Kulis Air National Guard Base property back form the U.S. Department of Defense. The acquisition includes approximately 130 acres of land, sidewalks, parking lots and access roads which are not the responsibility of the Anchorage Airport. AN increment of $450.0 (IARF) is included in the Governor's FY2013 budget. $375.0 - International Airport Revenue Fund University of Alaska Anchorage Campus Federal Receipt Authority for Pell Grants Additional federal receipt authority is needed to accommodate the increase in Pell grant activity. A related FY2013 budget amendment is also being considered. $5,000.0 - Federal Receipts 9:24:07 AM Co-Chair Hoffman solicited committee member questions concerning the FY12 supplemental requests. Ms. Rehfeld directed the committee to Page 9, line 79: Education and Early Development Commissioner's Office Judgments and Settlements Settlement between Department of Education and Citizens for the Educational Advancement of Alaska's Children (CEAAC) related to the state's education system for the fiscal years ending June 30, 2012 through June 30, 2017. $18,000.0 - General Fund Ms. Rehfeld added that the settlement listed specific requirements as to how the funds would be dispersed. Decisions would be made through a joint committee. Ms. Rehfeld noted line 80: Law Deputy Attorney General's Office Judgments and Settlements Actual judgment and settlement costs received as of January 30, 2012. $20,770.8 - General Fund She stated that this was the largest settlement in the request and had to do with the university's optional retirement plan. Ms. Rehfeld continued to highlight the FY 12 supplemental requests: Military and Veteran's Affairs Army Guard Facilities Maintenance Scope Change: Section 13, ch.29, SLA 2008, page 151, lines 27-28 Anchorage Armory Roof Replacement and G-Wing Preparation General Fund Match ($380.5) $380.5 - General Fund Military and Veteran's Affairs Army Guard Facilities Maintenance Amend: Section 1, ch.5, FSSLA 2011, page 88, line 21 State Match Requirement Change for Federal Energy Projects The federal/state funding ratios for armory operations in Kodiak, Ketchikan, and Kenai have changed due to federal regulations funding and armory use. $7.5 - General Fund Match - Federal Receipts Military and Veteran's Affairs Army Guard Facilities Maintenance Amend: Section 4, ch.43, SLA 2010, page 12, line 27 State Match Requirement Change for Deferred Maintenance Projects in Kodiak, Ketchikan, and Kenai The federal/state funding ratios for armory operations in Kodiak, Ketchikan, and Kenai have changed due to federal regulations funding and armory use. $737.5 - General Fund Match - Federal Receipts Natural Resources Gas Pipeline Project Extend the lapse date for permitting and application processing related to the state gas pipeline right-of- way work related to bringing North Slope natural gas to market, made in Section 22(c), ch.14, SLA 2009, as amended by sec.11(c), ch.1, FSSLA 2011, from June 30, 2012 to June 30, 2013. State Debt and Other Obligations International Airports Revenue Bonds Amend: Section 32(q), ch.3, FSSLA 2011 This allows the Alaska International Airport System to restructure debt payments to include additional passenger facility charge (PFC) revenue and the International Airports Construction Fund. Int. Airports Revenue Fund - ($13,5000.0) $10,000.0 - Int. Airports Construction Fund $3,500.0 - Passenger Facility Charges Fund Capitalization Disaster Relief Fund Supplemental Disaster Funding Current disasters are expected to exhaust the available general funds in the Disaster Relief Fund. In addition to fall and winter storms, traditionally there are spring floods that have been eligible for expenditures form the Disaster Relief Fund. The impact of this supplemental request is being considered for a FY2013 budget amendment. $3,000.0 - General Fund 9:27:13 AM Ms. Rehfeld explained that the remaining line items spoke to 3 ratification requests for fire suppression for $36.4, as well as two small requests from public safety. Co-Chair Hoffman solicited further questions or testimony on the legislation. SB 184 was HEARD and HELD in committee for further consideration.