HOUSE FINANCE COMMITTEE February 22, 1993 1:34 p.m. TAPE HFC 93-28, Side 2, #000 - end. TAPE HFC 93-29, Side 1, #000 - end. TAPE HFC 93-29, Side 2, #000 - 411. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:34 p.m. PRESENT Co-Chair Larson Co-Chair MacLean Representative Hoffman Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Martin was absent from the meeting. ALSO PRESENT Representative Barnes; Mike Greany, Director, Legislative Finance Division; Nancy Bear-Usera, Commissioner, Department of Administration; Cheryl Frasca, Division Director, Office of Management and Budget, Office of the Governor; Mary Lou BUrton, Fiscal Analyst, Department of Fish and Game; Kit Duke, Assistant Commissioner, Department of Public Safety; C. E. Swackhammer, Deputy Commissioner, Department of Public Safety; Kenneth E. Bischoff, Director, Division of Administrative Services, Department of Public Safety; Bob Bartholomew, Director, Division of Administrative Services, Department of Transportation and Public Facilities. SUMMARY INFORMATION HSCR 2 Disapproving Executive Order No. 87. HSCR 2 was reported out of Committee with "no recommendation" and with a zero fiscal note by the House Finance Committee for the Department of Transportation and Public Facilities and with two zero fiscal notes by the House Finance Committee for the Department of Administration. HB 101 "An Act relating to the adoption of the National 1 Electrical Code and the National Electrical Safety Code." HB 101 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Labor, dated 2/15/93. HB 135 "An Act making supplemental and special appropriations for the expenses of state government; making, amending, and repealing capital and operating appropriations; and providing for an effective date." HB 135 was HELD in Committee. HOUSE SPECIAL CONCURRENT RESOLUTION NO. 2 Disapproving Executive Order No. 87. REPRESENTATIVE RAMONA BARNES gave a brief overview of HSCR 2. She stated that HSCR 2 was introduced to disapprove the Governor's order (EO 87) to transfer leasing responsibilities to the Department of Transportation and Public Facilities. She stressed that the Department of Transportation and Public Facilities has "repeatedly ignored the desires and mandates of the Legislature regarding budget reductions to specific programs within the Department." She brought to members attention an attached memorandum from Legislative Finance Division dated February 10, 1993 to Rep. Eldon Mulder regarding the FY 93 budget for the Design and Construction components of DOT/PF (Attachment 1). Representative Barnes noted that the Department of Transportation and Public Facilities intends to establish a sinking fund to be managed by a Board of Directors with monies appropriated for leasing. She asserted that, "the Legislature would virtually have no control over this fund or how it is spent once money is transferred into it." She pointed out that under the State of Alaska Constitution, the Legislature has sole power of appropriation. KIT DUKE, ASSISTANT COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES spoke in opposition to HSCR 2. She noted that an organization was formed, Alaska State Facilities Administrators (ASFA) to assess the condition of the State's building inventory. It was determined by ASFA that the State's deferred maintenance backlog is approximately $250.0 million dollars and that the State's buildings are deteriorating due to a lack of 2 sufficient maintenance. There are currently eight executive branch agencies with responsibility for building maintenance. The Department of Transportation and Public Facilities has responsibility for approximately one-third of the State's buildings. She noted that the State must comply with the Americans with Disability Act (ADA). She asserted that the State needs to conserve energy. She noted that the State spends $20 million a year on energy consumption. Ms. Duke stressed that the State must also improve its management of leased facilities to assure safe, healthy buildings. The Department anticipates that savings can be found to defer expenses the State is facing. She noted that compliance with ADA could cost $400.0 million dollars. She maintained that the State cannot afford to allow Departments to separately address ADA compliance. She asserted that a statewide maintenance plan must be developed. She avowed that a centralized plan would allow the State to accomplish more for the same amount of funding. Representative Brown asked the status of legislation which is being drafted to implement an authority. Ms. Duke replied that the Department of Law has produced a draft which is being reviewed. Ms. Duke assured Representative Brown that Legislators will be able to review the draft legislation prior to a vote. Representative Brown questioned how EO 87 will affect land disposal. Ms. Duke stated that EO 87 clarifies that the Department of Transportation and Public Facilities has authority to purchase and dispose of land for public facilities. She elucidated that the purpose of the language is to allow the Department to acquire land for construction of public facilities. Co-Chair MacLean inquired further into the Department's authority to acquire and dispose land. She noted that the Department would have broad authority. Ms. Duke assured her that the Department's regulation requires due process. She was not aware of any lands that the Department would be disposing. She noted that the Department of Health and Social Services will construct juvenile facilities through the Department of Transportation and Public Facilities. The Department of Transportation and Public Facilities will be the overall authority for construction of new facilities by other departments. Representative Hoffman spoke in support of HSCR 2. He referred to problems within his district concerning the Department of Transportation and Public Facilities' maintenance of airport facilities. He asserted that the Department has not provided sufficient support to rural 3 facilities. Representative Brown asked if EO 87 would change agencies lease/purchase arrangements. She noted that the Legislature would have authority over leases of more that $1 million dollars a year. The Department of Transportation and Public Facilities would have authority over smaller lease arrangements. This represents a transfer of authority from the Department of Administration to the Department of Transportation and Public Facilities. Representative Navarre spoke in support of a uniform policy for cost control and allocation of state facilities. He noted that the Department of Transportation and Public Facilities has not received sufficient funding for deferred maintenance. He expressed concern with the creation of an additional authority. Representative Hoffman felt that the Department of Transportation and Public Facilities has not given sufficient priority to rural areas. Representative Navarre pointed out that some funding within the Department of Transportation and Public Facilities cannot be shifted. Representative Barnes and Representative Navarre discussed FY 93 funding to the Department of Transportation and Public Facilities' Design and Engineering Component. Representative Grussendorf noted that the Department of Transportation and Public Facilities is the State's "most complex and complicated division." He acknowledged the difficulty the State has had to clean up the Department's accounting for projects and reappropriations. He was hesitant to add new authority to the Department. Representative Brown noted that a fact sheet provided by Ms. Duke states that, "The merger will prevent additional expense to the Budget. It will be less costly to comply with ADA and code upgrade requirements with consolidated management than if many agencies are each separately responsible." Representative Brown asked how EO 87 affects ADA compliance. She noted that an administrative order gives authority to agencies to comply with ADA. Ms. Duke stressed that the administrative order would not be affected by EO 87. She emphasized that the Department of Transportation and Public Facilities will focus and plan for ADA compliance. Each agency will retain overall responsibility for ADA compliance. Representative Parnell asked for specific projections of cost and efficiency savings resulting from EO 87. He noted that the State will expend $200.0 thousand dollars for the 4 consolidation of services in the Department of Transportation and Public Facilities. Ms. Duke stated that the Department is endeavoring to identify savings to the State. She gave as an example a pilot project which will combine personnel of four agencies to complete maintenance projects as a team. She noted that the Department is also using FY 93 CIP funds for energy management to predict energy savings to the operating budget. Representative Barnes asked if agencies other than the Department of Transportation and Public Facilities could perform energy studies. Ms. Duke replied that one focus point would more efficiently accomplish the task. Representative Navarre reiterated his concern that there is no coordination in the statewide leasing program. He added that other factors such as; down time, moving and reconfiguation costs are not included in calculations of cost savings. He gave as example a case involving a lease by the Department of Fish and Game in Kenai. Representative Therriault observed that fiscal notes for EO 87 are zero. He asked why fiscal notes do not reflect the costs involved. Ms. Duke stated that the proposed legislation forming an authority will reflect the fiscal costs. NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION spoke in support of EO 87. She acknowledged that the Department of Administration has had a difficult time managing the State's leasing program. She noted that leases have been short-funded in an effort to force the Department to better manage the program. The Department has analyzed the leasing program. She emphasized that the procurement code and the competitive bidding process has made management difficult. Commissioner Usera stressed the need to coordinate the State's leasing program. She observed that lease expenses are not included as expenses in all department's budgets. She recommended a lease or facility cost charge-back system to assure that departments evenly share the burden of these costs. She agreed that both the Department of Transportation and Public Facilities and Department of Administration have had problems in managing lease programs. She acknowledged that EO 87 would only be a first step. (Tape Change, HFC 93-29, Side 1) Commissioner Usera stated that programs and departments would do cost accounting on the amount of space they occupy and overhead costs. She emphasized that the Department of 5 Administration supports EO 87. If EO 87 is not accepted the Department of Administration will need to reconsider management changes to improve the lease and state owned facilities program. Commissioner Usera did not know the composition of the proposed Board of Directors. Representative Navarre encouraged the Legislature to address the lease and deferred maintenance problem. Commissioner Usera agreed with Representative Navarre. She stressed that changes in the program's structure are needed. Representative Navarre noted that the Legislature mandated that the Department of Transportation and Public Facilities use FY 93 CIP receipts for the Design and Engineering component. Representative Barnes asserted that a reappropriation occurred allowing the Department to add back $1.5 million dollars into the Design and Engineering Component, after Conference Committee deliberations. Representative Parnell stressed that more information is needed regarding potential cost savings. Ms. Duke emphasized that savings will be realized in gained efficiencies. She stressed that savings cannot be assessed until the Department has an opportunity to test the consolidation effort. She underscored that an authority is important to guarantee accountability. She assured members that the Department does not intend that funds will be outside of legislative oversight and action. Ms. Duke discussed the proposed sinking fund. She observed that monies will be appropriated to agencies. Agencies will deposit funds for deferred maintenance in the sinking fund. The sinking fund allows monies for repair and major maintenance beyond the fiscal year. This will permit agencies to plan for major maintenance and repair activities. Ms. Duke clarified that the State would only perform maintenance on leased buildings if the State's contract contained provisions for maintenance. Representative Brown asked how rent is affected by where the function is performed. Ms. Duke agreed that where the function is performed would not affect the rent paid. Members discussed parliamentary proceedings regarding House Special Concurrent Resolutions. Representative Hoffman MOVED to report HSCR 2 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 6 HSCR 2 was reported out of Committee with "no recommendation" and with a zero fiscal note by the House Finance Committee for the Department of Transportation and Public Facilities and with two zero fiscal notes by the House Finance Committee for the Department of Administration. HOUSE BILL NO. 101 "An Act relating to the adoption of the National Electrical Code and the National Electrical Safety Code." Co-Chair Larson noted that HB 101 was passed out of the Labor and Commerce Committee with five "do pass" recommendations. He noted that HB 101 was requested by the International Brotherhood of Electrical Workers to assure the State's adoption of the minimum electrical safety standards for the State as set by the American National Standards Institute. Representative Grussendorf MOVED to report HB 101 out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HB 101 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Labor, dated 2/15/93. HOUSE BILL NO. 78 "An Act relating to the testimony of children in certain criminal proceedings; and providing for an effective date." Co-Chair MacLean submitted a request to waive HB 78 from the House Finance Committee. Co-Chair Larson noted that HB 78 relates to the testimony of children. He stated that HB 78 is accompanied by a zero fiscal note and is supported by the Department of Law. He observed that, "under current law, in a criminal proceeding involving a child victim or witness, the court can order that the testimony of the child be taken by closed circuit television or through one-way mirrors if it determines that the child's testimony under normal court procedures would result in the child's inability to effectively communicate." House Bill 78 would allow the court to extend those privileges to children to the age of 7 16, up from the current age of 13. Co-Chair Larson informed members of his intention to waive HB 78 if there are no objections from members. Members were informed to contact his office if they objected to waiving HB 78. HOUSE BILL NO. 135 "An Act making supplemental and special appropriations for the expenses of state government; making, amending, and repealing capital and operating appropriations; and providing for an effective date." CHERYL FRASCA, DIVISION DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR reviewed HB 135 by section. She began on section 28. (See House Finance Committee minutes 2/18/93) DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT * Sec. 28 ASMI - $196.3 thousand dollars This request would provide a general fund match to federal dollars for the overseas marketing program. * Sec. 29 ASMI - $60.0 thousand dollars FY 92 extension This request would extend the lapse date of the FY 92 balance to be used as general fund (GF) match for the federal grant contained in section 28. DEPARTMENT OF MILITARY AND VETERANS AFFAIRS * Sec. 30 Veterans Death Gratuity - $90.0 thousand dollars This request would respond to increased claims. DEPARTMENT OF NATURAL RESOURCES * Sec. 31 Fire Suppression - $6.0 million dollars Three million dollars would provide funding in the case of a fire prior to fiscal year FY 94. The Department incurs $3.6 million dollars in fixed costs. Unused funds would lapse into the General Fund. 8 Representative Grussendorf referred to a letter submitted by the Governor to the Legislative Budget and Audit Committee requesting emergency funding for fire suppression. He noted that no emergency existed. He recalled that the Legislative Budget and Audit Committee decided not to appropriate emergency funding for possible future fire suppression needs. * Sec. 32 Land Selection Program - $641.0 thousand dollars This request is the result of the expedition of land selection in order to meet federal deadlines. * Sec. 33 Challenge Alaska Grants - This request would change the scope of a 1989 capital project grant. DEPARTMENT OF FISH AND GAME * Sec. 34 Division of Boards - $492.0 thousand dollars This request is the result of legislation enacted during the Special Session of the Seventeenth Alaska Legislature. (The original fiscal note associated with legislation passed was for $365.0 thousand dollars. There was no vehicle for passage of fiscal notes associated with legislation.) The Division of Boards has had an increase in board meetings. * Sec. 35 Division of Subsistence - $8.0 thousand dollars This request is the result of legislation enacted during the Special Session of the Seventeenth Alaska Legislature. The original request by the Division of Subsistence was $55.0 thousand dollars. * Sec. 36 King Salmon Tags - $84.3 thousand dollars This request would make vendor payments for King Salmon tags. The request is the result of new legislation. The associated fiscal note failed to be included in the FY 93 Operating Budget. Funding will be from the General Fund. * Sec. 37 Ratify and Amend Prior Year Expenditures 9 - Old appropriations that have not been corrected in the accounting system will be cleared. * Sec. 38 Fund Shift - This will replace unrealized federal receipts from a 1987 CIP appropriation for Sport Fisheries, Public Access Acquisition. Unrealized federal receipts will be replaced by an appropriation from the Fish and Game Fund of $134.7 thousand dollars. The Department of Fish and Game incorrectly identified state matching contributions. MARY LOU BURTON, FISCAL OFFICER, DEPARTMENT OF FISH AND GAME explained that state CIP funds were insufficient to match federal funds. She added that the Department failed to properly account for the state match. Section 38 will replace monies that were spent out of the General Fund with Fish and Game funds. DEPARTMENT OF PUBLIC SAFETY * Sec. 39 Contract Jails - $690.4 thousand dollars This request would meet increased operating costs. The FY 94 Operating Budget has been adjusted to include FY 93 supplemental costs. Co-Chair Larson asked for information concerning state jail contracts. C. E. SWACKHAMMER, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY explained that contract jails are negotiated on an annual basis. He noted that there is a state mandated responsibility for prisoners. Disputes have occurred between the State and municipality's concerning fair cost. Representative Parnell asked if costs are based on prisoner days. Mr. Swackhammer stated that there are fixed costs for each municipalities that provides the service. In addition, variables exist. KEN BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY noted that contracts are not negotiated for prior to appropriation requests. Mr. Swackhammer stressed that prisoner location and prisoner days are included in cost assessments. * Sec. 40 Criminal Records and Id. - $90.6 10 thousand dollars This request represents an increase in system use. New legislation has been approved requiring applicants for teacher certification and other activities to supply fingerprint background checks. * Sec. 41 Bloodborne Pathogens - $126.7 thousand dollars This request would allow the Department to comply with requirements regarding bloodborne pathogens. The Department will purchase disposable gear and vaccines. * Sec. 42 Prisoner Transportation - $125.0 thousand dollars This request would pay for the cost of increased prisoner transportation. Costs are primarily for air transportation. * Sec. 43 Arbitration Settlement - $101.4 thousand dollars This request would pay settlement costs for arbitration involving an employee and a controlled substance. (Tape Change, HFC 93-29, Side 2) * Sec. 44 Civil Air Patrol - $125.0 thousand dollars This request is for aircraft maintenance and operation costs. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES * Sec. 45 Arbitrator's Award - $539.6 thousand dollars other funds. This request would pay for overtime of on-site construction engineers. The overtime dates back to 1991 and is the result of arbitration. BOB BARTHOLOMEW, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES clarified that engineers are not eligible for overtime under 11 federal law. During summer construction seasons engineers work from 60 - 80 hours a week. Administrative policy provided for straight time overtime for hours in excess of 37.5. In 1981, the Department implemented overtime policy which provided that employees receive: * 37.5 - 50.0 hours - no compensation, * 50.0 - 72.0 hours - compensation. Arbitrators ruled on behalf of the union that the overtime policy could not be changed without union negotiation. Mr. Bartholomew explained that the settlement has been paid to employees. The FY 93 CIP projects will be short funded if section 45 is not appropriated. Employees are classified, range 16 and 18, field engineers. * Sec. 46 Dalton Highway - $1,222.9 million dollars This request would pay for snow removal, ice control and maintenance related activities. * Sec. 47 Ratification of Prior Year Supply and Inventory Asset Account Expenditures Spoilage and breakage were not accounted for in assessing supply and inventory assets. * Sec. 48 Extend FY 93 Operating Lapse Date - This request would extend the FY 93 Operating Budget lapse date for maintenance and operations. DEPARTMENT OF ENVIRONMENTAL CONSERVATION * Sec. 49 Seafood and Sanitation Activities - $351.2 thousand dollars This request would replace unrealized program receipts. The Department did not receive approval to implement regulations assessing fees until February 19, 1993. * Sec. 50 Paralytic Shellfish Poison Inspections - $109.9 thousand dollars This request is the result of PSP infected crabs. * Sec. 51 Water Quality Standards Advisory Group - $41.4 thousand dollars This request would pay for meeting costs. 12 DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS * Sec. 52 Organizational Grant - $300.0 thousand dollars This request would pay the first year organizational grant for the Yakutat Borough. * Sec. 53 Revenue Sharing - $25.6 thousand dollars The Department of Community and Regional Affairs used incorrect population figures to calculate revenue sharing for the Central Mat-Su and Greater Palmer fire service areas. DEPARTMENT OF CORRECTIONS * Sec. 54 Operations - $6,879.4 million dollars UNIVERSITY OF ALASKA * Sec. 55 UAF Snow Removal - $375.0 thousand dollars ALASKA COURT SYSTEM * Sec. 56 Mental Health Trust Case Law Clerk - $19.9 thousand dollars Mental Health Trust This request would add a law clerk to assist Judge Green with the backlog involved in the Mental Health Trust Case. MULTIPLE DEPARTMENTS * Sec. 57 Miscellaneous Claims and Stale-Dated Warrants - $159.6 thousand dollars This request would settle claims and billings that are more than two years old for the Department of Administration, Department of Health and Social Services, Department of Labor, Department of Public Safety, Department of Transportation and Public Facilities, Department of Corrections and Department of Military and Veterans Affairs. HB 135 was HELD in Committee. 13 ADJOURNMENT The meeting adjourned at 3:30 p.m. 14