HOUSE FINANCE COMMITTEE March 23, 1993 1:36 p.m. TAPE HFC 93-54, Side 2, #000 - end. TAPE HFC 93-55, Side 1, #000 - end. TAPE HFC 93-55, Side 2, #000 - #481. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:36 p.m. PRESENT Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf ALSO PRESENT Representative Ulmer; Mike Greany, Director, Legislative Finance Division; Cheryl Frasca, Director, Division of Budget Review, Office of Management and Budget; Darrel J. Rexwinkel, Commissioner, Department of Revenue; Rod R. Mourant, Special Assistant, Department of Revenue; Tracy McGill, Director, Division of Administrative Services, Department of Revenue; Jeff Morrison, Director, Administrative and Support Services, Department of Military and Veterans Affairs; Karen Rehfeld, Fiscal Analyst, Legislative Finance Division. SUMMARY INFORMATION SB 19 "An Act relating to the crime of conspiracy." SB 19 was placed in a subcommittee consisting of Chair Hanley with members Representatives Parnell and Hoffman. HB 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." HB 55 was HELD in Committee. Co-Chair Larson provided members with a copy of Work Draft 8-LSO896\E: "An Act amending the basis for determining 1 refunds to local governments under the program of shared fisheries taxes; and providing for an effective date" (Attachment 1). He announced his intentions to submit the work draft as House Finance Committee legislation. He asked members to contact his office if they had objections. SENATE BILL NO. 19 "An Act relating to the crime of conspiracy." Co-Chair Larson announced that SB 19 would be placed in a subcommittee consisting of Chair Hanley with members Representatives Parnell and Hoffman. HOUSE BILL NO. 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." DEPARTMENT OF MILITARY AND VETERANS AFFAIRS - AMENDMENTS CHERYL FRASCA, DIVISION DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR discussed the Governors amendment to the Department of Military and Veterans Affairs' FY 94 operating budget (copy on file). She explained that the amendment would reduce the Hazardous Materials Response component to conform to the budget amount in the Department of Environmental Conservation Response Fund. The amendment would also centralize accounting functions. Co-Chair Larson MOVED to ADOPT, the Governor's Amendment. There being NO OBJECTION, it was so ordered. Representative Foster MOVED to Adopt Amendment MVA-1. JEFF MORRISON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS explained that Amendment MVA-1 would allow the Department two additional preventative maintenance cycles. Most manufactures recommend at least four preventative maintenance cycles a year. Each maintenance cycle costs approximately $140.0 thousand dollars. Representative Foster MOVED to AMEND, Amendment MVA-1, to delete "$240.0 thousand dollars" and insert "$140.0 thousand dollars" (copy on file). He stated that one cycle would be added instead of two. Representative Hanley noted that the amendment should also be AMENDED to delete "$5,200.9 million dollars" and insert "$5340.9 million dollars." 2 Representative Martin asked if regional personnel from other departments could perform maintenance. Mr. Morrison observed that the Department of Military and Veterans Affairs is instituting a pilot project in Bethel. There being NO OBJECTION, Amendment MVA-1 was Amended. Representative Foster MOVED to Adopt Amendment MVA-1, as AMENDED. Representative Martin OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Foster, Grussendorf, Hoffman, Brown, Navarre OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (5-6). Representative Foster MOVED to Adopt Amendment MVA-2, $270.0 thousand dollars to fund the Veterans Death Gratuity (copy on file). Mr. Morrison observed that federal veterans receive $350.0 hundred dollars. He estimated 20 percent of Alaskan veterans would receive the federal grant. Mr. Morrison thought that there will be a $90.0 thousand dollar shortfall in the FY 94 Operating Budget. Representative Navarre questioned whether the State is under obligation to fund the death gratuity. Mr. Morrison did not feel the State is under obligation to fund the gratuity. REPRESENTATIVE WILLIS read written remarks in support of Amendment MVA-2 (Attachment 2). Co-Chair Larson stated that he has been advised that the gratuity would not be paid after the appropriation is depleted. Representative Hoffman felt that legislation should be introduced to change statutes regarding the death gratuity. Members discussed the state's responsibility to fund the gratuity. Representative Martin noted that other unfunded programs remain in the statutes. Representative Hoffman asked if a supplemental request will follow underfunding. Co-Chair Larson agreed that the Department could submit a supplemental. Co-Chair Larson discussed transferring funding from the Veterans Death Gratuity to the Veterans Services component. Representative Navarre asked if it is the Committee's intention to introduce legislation to repeal the death gratuity if Amendment MVA-2 fails. Co-Chair Larson stated that he would interpret a failure to fund the gratuity as 3 the Committee's intention to repeal the gratuity. Representative Martin did not agree with Co-Chair Larson's interpretation. Co-Chair Larson reiterated the motion to adopt MVA-2. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (4-7). Co-Chair Larson MOVED to increase the Veterans Services component #421 by $100.0 thousand dollars. Representative Brown clarified that the funding would be in the contractual line. Mr. Morrison discussed potential services that could be adopted with the increased funding. There being NO OBJECTION, it was so ordered. DEPARTMENT OF REVENUE COMMISSIONER DARREL J. REXWINKEL discussed the Governor's proposed amendments to the Department of Revenue's FY 94 operating budget (copy on file). He summarized the Governor's amendment. The amendment would: * Restore 5 PFNs to the Income and Excise Audit Division; * Restore $297.0 thousand dollar to the Income and Excise Audit Division; * Restore 4 PCNs to the Oil and Gas Audit Division; * Restore $338.0 thousand dollars to the Oil and Gas Audit Division; * The total request is $3,380.0 million dollars; (Tape Change, HFC 93-55, Side 1) * Funding for Oil and Litigation contained in the front section of HB 55 will be reduced by $149.0 thousand dollars. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 103, Amusement and Gaming Tax, <$35,0 thousand dollars> into CSHB 50 (FIN) (copy on file). There being NO OBJECTION, it was so ordered. 4 Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 104, Aviation Fuel Tax, <$30.0 thousand dollars> into CSHB 50 (FIN)(copy on file). There being NO OBJECTION, it was so ordered. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 106, Liquor License Tax, $10.0 thousand dollars into CSHB 50 (FIN) (copy on file). There being NO OBJECTION, it was so ordered. Commissioner Rexwinkel stated that the Governor's amendments reflect actual numbers collected for taxes in FY 93. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 107, Fisheries Tax, $3,700.0 million dollars into CSHB 50 (FIN) (copy on file). There being NO OBJECTION, it was so ordered. TRACY MCGILL, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE explained that the Department anticipates that the municipal share for the Fisheries Tax will be $16 million dollars. Members discussed the Fisheries Tax. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 111, Child Support Enforcement (copy on file). Ms. McGill clarified that there Department needs the appropriation to match federal funds. There being NO OBJECTION, it was so ordered. Co-Chair Larson referred to the Governor's amendment for the Department of Revenue component 113, Income and Excise Audit, $297.0 thousand dollars into CSHB 50 (FIN) (copy on file). Commissioner Rexwinkel reiterated that the amendment restores five positions. He spoke in support of the amendment. He asserted that each position will bring $1 million dollars to the state in the form of collected tax. He emphasized the importance of addressing the backlog of cases. Co-Chair Larson noted that Amendment REV-4 addresses the Governor's amendment for component 113 (copy on file). Ms. McGill reviewed Amendment REV-4. She stated that the amendment will adopt the Governor's amendments for components 113 and 115 and the Subcommittee's reduction of $114.8 thousand dollars. Commissioner Rexwinkel explained amendment REV-4. 5 Representative Brown spoke in support of additional funding for the Income and Excise Audit Division and the Oil and Gas Audit Division. She noted that the Subcommittee's budget would bring these Divisions below the FY 93 level. She stressed that the Divisions maintain oversight of taxpayers. She asserted that some taxes are not being monitored at the current funding level. Commissioner Rexwinkel explained the Governor's budget for the Divisions of Oil and Gas Audit and Income and Excise Audit. Members discussed the Governor's amendments for the Department of Revenue components 113, 115, 1854 (Oil and Gas Litigation Audit Front Section $149.5 thousand dollars> (copy on file). Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 113, 115 and 1854 into CSHB 50 (FIN). Representative Martin OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, MacLean, Larson OPPOSED: Foster, Hanley, Martin, Parnell, Therriault The MOTION PASSED (6-5). Amendment REV-4 was WITHDRAWN. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 125, Administrative Services into CSHB 50 (FIN) (copy on file). Commissioner Rexwinkel explained that the amendment reclasses a PPT to PFT. There being NO OBJECTION, it was so ordered. Co-Chair Larson MOVED to ADOPT and INCORPORATE the Governor's amendment for the Department of Revenue component 1883, Gaming, $686.4 thousand dollars into CSHB 50 (FIN) (copy on file). Representative Navarre noted that the position being transferred out of the Department of Commerce and Economic Development is $681.4 thousand dollars. Ms. McGill clarified that an additional $5.0 thousand dollars will be appropriated to the Department of Revenue. There being NO OBJECTION, it was so ordered. Co-Chair Larson noted corrections to Amendments REV-1, REV-2 and REV-3 (copy on file). Co-Chair Larson MOVED to ADOPT and INCORPORATE Amendment REV-1, $2.0 thousand dollars for the Alcoholic Beverage Control Board travel, into CSHB 50 (FIN) (copy on file). 6 Representative Martin OBJECTED. Commissioner Rexwinkel spoke in support of Amendment REV-1. He noted that the Board is mandated by statute to conduct hearings around the state. Representative Brown did not feel that teleconference hearings were a viable alternative to travel. She noted that the Board's budget has been previously reduced. Representative Martin discussed the need to redeem frequent flyer mileage now given to employees. A roll call vote was taken on the motion to adopt Amendment REV-1. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre, Larson OPPOSED: Hanley, Martin, Parnell, Therriault, Foster The MOTION PASSED (6-5). Co-Chair Larson MOVED to ADOPT and INCORPORATE Amendment REV-2, $18.1 thousand dollars for travel, Treasury Management, into CSHB 50 (FIN) (copy on file). Representative Martin OBJECTED. Representative Brown noted that there has been a 10 percent travel reduction to this component. She observed that the Board is new. She stressed the Board's need for training. (Tape Change, HFC 93-55, Side 2) A roll call vote was taken on the motion to adopt Amendment REV-2. IN FAVOR: Navarre, Parnell, Brown, Grussendorf, Hanley, Larson OPPOSED: Therriault, Foster, Hoffman, Martin, MacLean The MOTION PASSED (6-5). Co-Chair Larson MOVED to ADOPT and INCORPORATE Amendment REV-3, $2.2 thousand dollars for oil and gas tax case review travel, into CSHB 50 (FIN) (copy on file). Representative Martin OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Parnell, Brown, Grussendorf, Larson OPPOSED: Therriault, Foster, Hanley, Hoffman, Martin, Navarre, MacLean The MOTION FAILED (4-7). Amendments REV-4 and REV-5 were WITHDRAWN (copies on file). Representative Brown discussed Amendment REV-6 (copy on file). She noted that REV-6 would restore the $114.8 thousand dollars to the front section of HB 55 to maintain 7 the Divisions of Oil and Gas and Excise and Income Audit at the FY 93 level. Commissioner Rexwinkel stressed that the Department needs additional funding to address the backlog of tax audit cases. He observed that the Department has cases dating to 1976. Representative Brown MOVED to ADOPT and INCORPORATE Amendment REV-6. A roll call vote was taken on the motion to adopt Amendment REV-6. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (4-6). Representative Grussendorf discussed Amendment REV-7 (copy on file). He explained that the amendment would restore Child Support Enforcement field offices in Juneau and Fairbanks. He stressed the need to retain field offices. Representative Grussendorf MOVED to ADOPT and INCORPORATE Amendment REV-7 into CSHB 50 (FIN). Representative Martin OBJECTED. He asserted that the positions do not carry caseloads. A roll call vote was taken on the motion. IN FAVOR: Brown, Grussendorf, Hoffman, Navarre OPPOSED: Foster, Hanley, Martin, Parnell, Therriault, MacLean, Larson The MOTION FAILED (4-7). Amendment REV-8 was WITHDRAWN (copy on file). Representative Brown MOVED to AMEND Amendment REV-9 to $200.0 as an increment to the contractual services line of the Oil and Gas Audit Division. Representative Martin OBJECTED. Representative Brown spoke in support of Amendment REV-9. Commissioner Rexwinkel clarified that there is a three year statute of limitation for filing assessments. There is a six year statute of limitation for resolving assessment issues. Amendment REV-9 was HELD OPEN. HB 55 was HELD in Committee. ADJOURNMENT The meeting adjourned at 3:35 p.m. 8