HOUSE FINANCE COMMITTEE MAY 4, 1996 11:50 P.M. TAPE HFC 96 - 164, Side 1, #000 - end. TAPE HFC 96 - 164, Side 2, #000 - end. TAPE HFC 96 - 165, Side 1, #000 - end. TAPE HFC 96 - 165, Side 2, #000 - end. TAPE HFC 96 - 166, Side 1, #000 - end. TAPE HFC 96 - 166, Side 2, #000 - #573. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 11:50 P.M. PRESENT Co-Chair Hanley Representative Martin Co-Chair Foster Representative Mulder Representative Brown Representative Navarre Representative Grussendorf Representative Parnell Representative Kelly Representative Therriault Representative Kohring ALSO PRESENT Representative Carl Moses; Representative Scott Ogan; John Walsh, Staff, Representative Richard Foster; Fred Fisher, Fiscal Analyst, Legislative Finance Division; Kelly Huber, Staff, Senator Rick Halford; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Brett Huber, Staff, Senator Lyda Green; Nancy Slagle, Director, Division of Budget Review, Office of Management and Budget; Gary Hayden, System Director, Marine Highway System, Department of Transportation and Public Facilities; Chris Clark, Staff, Representative Carl Moses; Nico Bus, Director, Division of Administrative Services, Department of Natural Resources; Janet Clarke, Director, Division of Administrative Services, Department of Health and Social Services; Thomas Bringham, Director, Division of Statewide Planning, Department of Transportation and Public Facilities; Laurie Otto, Deputy Attorney General, Criminal Division, Department of Law; Richard Pegues, Director, Administrative Services Division, Department of Law; Sam Kito, III, Legislative Liaison, Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities; John Bitney, Alaska Housing Finance Corporation, Department of Revenue; Karen Rehfeld, Director, Division of Administrative Services, Department of Education; Tom Wright, Staff, Representative Ivan Ivan; Tim Sullivan, 1 Alaska Craftsman Home Program, Anchorage Homebuilders Association, Anchorage; Daniel Fauske, Executive Director, Alaska Housing Finance Division, Department of Revenue. SUMMARY HB 500 An Act making capital and other appropriations; and providing for an effective date. HB 500 was HELD in Committee for further consideration. HB 541 An Act providing for the issuance of general obligation bonds in the amount of $148,500,000 for the purpose of paying the cost of design and construction of state correctional facilities; and providing for an effective date. HB 541 was postponed for a hearing at a latter date. SB 136 An Act making appropriations for capital project matching grant funds and to capitalize funds; making, amending, and repealing capital appropriations; and providing for an effective date. HCS CS SB 136 (FIN)am (brf sup maj fld) was reported out of Committee with a "do pass" recommendation. SB 141 An Act relating to legislative ethics; and providing for an effective date. SB 141 was postponed for a hearing at a latter date. SB 152 An Act relating to geographic differentials for the salaries of certain state employees who are not members of a collective bargaining unit; relating to periodic salary surveys and preparation of an annual pay schedule regarding certain state employees; relating to certain state aid calculations based on geographic differentials for state employee salaries; and providing for an effective date. SB 152 was postponed for a hearing at a latter date. SB 215 An Act streamlining the functions of state government, including authorizing the commissioner 2 of fish and game to award grants for certain resource activities; allowing agents selling fish and game licenses and tags to retain certain compensation; authorizing the Department of Health and Social Services to award grants for certain services for developmentally delayed or disabled children; relating to rabies control and administration of flour and bread standards by the Department of Environmental Conservation; repealing the Athletic Commission, the regulation of boxing and wrestling, the certification of professional geologists, and the Water Resources Board; repealing certain filing statements and bonds for enforcement and collection of certain taxes; and providing for an effective date. SB 215 was postponed for a hearing at a latter date. SB 270 An Act relating to juveniles; relating to the jurisdiction of juvenile courts; relating to the release of juveniles; and relating to records concerning juveniles. SB 270 was postponed for a hearing at a latter date. SCR 23 Relating to long range financial planning. SCR 23 was postponed for a hearing at a latter date. SENATE BILL 136 "An Act making appropriations for capital project matching grant funds and to capitalize funds; making, amending, and repealing capital appropriations; and providing for an effective date." HOUSE BILL 500 "An Act making capital and other appropriations; and providing for an effective date." Co-Chair Hanley explained that there were five deleted sections from the proposed house bill included in the handout titled Amendment to 2D CS SB 163 (FIN) am (brf sup maj fld). [Copy on file]. The section numbers are #36, JOHN WALSH, STAFF, REPRESENTATIVE RICHARD FOSTER, spoke to the differences between the two bills. The changes occur in 3 Section #2(a), adding a citation reference for the City and Borough of Sitka high school project. Section #7 has a language change, recommended by the sponsor and would include Hanshah Junior High School. He continued, Section Municipality of Anchorage, replacing the "G" version. Section #11(c) would provide for a new reference funding for the Special Olympic citation. Section #22(b) will provide a new title; Section #26(b) changes the lapse date. Section #27(e) also changes a lapse date; Section #32(a) would delete a reference to AS 18.26.260. Mr. Walsh summarized that Sections #43 (a, b, c, d & e) were replacements from the previous draft. Section #51 (a, b & c) provide new inserts. Sections #53 through #60 would be new sections. Representative Brown declared a "conflict of interest" noting that she is a Special Olympics board member and that they have several reappropriations included in the proposed legislation. Representative Mulder echoed that he too sat on that board. Representative Brown referenced Page 4, Line 30, requesting "and software" be inserted following "computers". Representative Martin asked if there was a difference between needing a computer versus software. Representative Brown replied that the proposed plan would allocate $12 thousand dollars for computer equipment and $3 thousand dollars for software. Representative Brown MOVED to adopt the amendment. There being NO OBJECTION, it was adopted. Representative Brown referenced Section #18, Page 8, asking who requested the statewide reappropriation. Mr. Walsh explained that amendment was requested by the Mat-Su delegation. The original appropriation had been general fund dollars. Representative Navarre noted that the appropriation had been made in 1989 and was not extended. Co-Chair Hanley understood that if any of the funds had been spent, the appropriation would then an ongoing appropriation, with a five year lapse for capital projects. FRED FISHER, FISCAL ANALYST, LEGISLATIVE FINANCE DIVISION, interjected that capital appropriations do not lapse until the project is completed. KELLY HUBER, STAFF, SENATOR RICK HALFORD, clarified that the Department of Transportation and Public Facilities (DOTPF) had contacted Senator Halford and Senator Green informing them that the project had been completed. The 4 reappropriation request was submitted with those projects included. Representative Navarre questioned when a project was completed, how were the remaining funds distributed. Mr. Fisher explained that the agency should lapse the remaining funds back into the general fund. Representative Brown elaborated that it has not been a policy in the past to have individual district delegations reappropriating statewide pieces within the budget. Co- Chair Hanley reiterated that DOTPF had made the request. ANNALEE MCCONNELL, DIRECTOR, DIVISION OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, offered to provide information regarding the request. BRETT HUBER, STAFF, SENATOR LYDA GREEN, agreed that the projects had been submitted by DOTPF as referenced in the back-up materials. He added, Senator Green's office then asked which projects would be appropriate for the remaining funds. The Department, through Margaret Holland's office, contacted Senator Green's office with a list of suggested projects. Representative Brown questioned the expenditures referenced on Page 11, Line 6. Representative Therriault replied that those funds represented a portion of the past capital budget monies for the Interior delegation. The proposed language would broaden the scope so as to make a purchase from the Monroe foundation. Co-Chair Hanley commented that he had prepared an amendment to correct that. Discussion followed among Committee members regarding Section #22. Representative Brown spoke to Section #23. JANET CLARKE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, explained that last year, there was a section in the reappropriation bill similar to the request included in Section #23. Those funds had been appropriated to "other" items last year, discovered when Senator Miller's office contacted the Department. The request would not change from last year, although would reverse the decision. The language was too broad last year. Representative Brown spoke to Section #32, Page #17, questioning why the reappropriation continued. CHRIS CLARKE, STAFF, REPRESENTATIVE CARL MOSES, explained that there had been $28 thousand dollars remaining in that account. Mr. Clarke understood that the original 5 reappropriation was a district appropriation. Representative Brown reiterated her concern with individual legislators reappropriating money from the department's statewide projects. She asked if DOT&PF had been involved in that decision. Mr. Clarke replied that Senator Hoffman's office had been advised. Representative Brown spoke to Page 19, Section #35, appropriation to the Legislative Council. Mr. Walsh noted that the request had originated within the Legislative Council. Representative Brown asked the total amount of reappropriation funding included in the proposed legislation. Mr. Walsh thought it was around $800 thousand dollars. In response to Representative Brown's query to Page 20, Section #41, Mr. Walsh advised that the request had been provided by Representative Williams and Senator Taylor. GARY HAYDEN, SYSTEM DIRECTOR, MARINE HIGHWAY SYSTEM, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, advised that the appropriation came from the Alaska Marine Highway Fund. The building currently being used for administrative functions is being considered by the City and Borough of Juneau (CBJ) for school expansion. Representative Brown asked if DOTPF supported the appropriation. Mr. Hayden stated they did not. Representative Brown MOVED to delete Section #41. Representative Kelly OBJECTED. Co-Chair Hanley recommended deleting questionable sections on the House Floor. Representative Brown pointed out that generally amendments to an appropriation bill are not allowed on the floor. She asked the policy originally intended for submitting a reappropriation. Mr. Walsh informed Committee members that a memo had been circulated, requesting that the reappropriation request stay within the districts appropriations. Representative Brown WITHDREW the MOTION to amend, agreeing to making the motion on the House floor. There being NO OBJECTION, it was withdrawn. Representative Navarre MOVED to delete Section #41. Co- Chair Hanley responded that he supported deletions to any individual legislators statewide recommendations. Co-Chair Hanley questioned other sections of the legislation which addressed those concerns. Mr. Walsh noted Section #53 was one. Representative Navarre WITHDREW the MOTION to delete Section #41. Co-Chair Hanley perused the bill for similar reappropriation requests. 6 Mr. Walsh added that Section #42 was an authority fund which has not been used to date. (Tape Change, HFC 96-164, Side 2). Representative Brown asked who sponsored the reappropriation requested in Section #43. Ms. McConnell spoke to Section a plan for the advocacy opening ANWR. She recommended that Section (e) be removed. Representative Navarre questioned Section #44(b) and requested a list of those expenditures. Representative Brown advised that Section #44 (a) & (b) were unrelated. Mr. Walsh responded that the sponsor had requested that they be submitted together. Representative Brown referenced Section #47 and asked what was meant by "agency realignment and space consolidation". Mr. Walsh deferred that question to Legislative Affairs. Co-Chair Hanley commented that the lease on the Goldstein Building was about the expire. Representative Mulder noted that he had requested that Section #48 be added in order to provide greater flexibility to the Department of Corrections for more efficient operation. He pointed out that the Department had been allowed a carry forward from last year. Representative Brown questioned limiting the use of those funds for community residential centers. Representative Mulder replied that decision would match considerations made by the Criminal Justice cabinet to encourage half way house beds. Ms. McConnell interjected that the Department would prefer not to have the restriction recommended in Section #48, requesting instead the carry-forward. Representative Mulder MOVED to WITHDRAW Section #53. He stated that he had been misinformed regarding the projects which that money could be used for. Representative Brown referenced Section #54. Mr. Walsh stated those funds would be used by Alaska Industrial Development and Export Authority (AIDEA) for development of a mine near Crooked Creek. Ms. McConnell stated that the Administration does not support the request; the bond rating has not gone through the normal process. Representative Brown added that Section #54 does not fit the proposed policy and is not a reappropriation. Representative Navarre questioned the inclusion of Section 7 this in conjunction with Representative Green. NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF NATURAL RESOURCES, stated that this was AOGGC money; at the time that it was appropriated, AOGGC was part of the Department of Natural Resources (DNR). Representative Therriault understood that the funds were still in DNR budget, having not been spent for two years. Ms. McConnell advised that all departments are responsible to report to OMB regarding lapsed fund amounts. Co-Chair Hanley asked Representative Therriault if back-up was available indicating that Section #22 was a district appropriation request. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, commented on the proposed amended legislation. She explained that Sections #30 & #31 address communities in the capital matching grants program. She noted that the language had been duplicated. Section #34 would provide for extension of the lapse date on the Science and Technology grants. Co-Chair Hanley recommended incorporating the discussed amendment to 2D CS SB 136 (FIN) am (brf sup maj fld), deleting Sections #18, #32(b), #41, #42, #53, #54, #55, #31, Representative Parnell MOVED to adopt Amendment #1, 9- GH2034\G.7, Cramer, 5/2/96, which would reappropriate money within the Anchorage school districts to Taku Elementary School. [Copy on file]. There being NO OBJECTION, it was adopted. Representative Martin MOVED to adopt Amendment #2, 9- GH2034\M.2, Cramer, 5/4/96, appropriating money from the Ptarmigan Elementary safety zone light to the Department of Administration. [Copy on file]. There being NO OBJECTION, it was adopted. (Tape Change HFC 96-165, Side 1). Ms. Slagle spoke to Amendment #3. [Copy on file]. The funds would be used for the back-log of "other" cases, addressed in Subsections (a) & (b). The Department of Commerce and Economic Development (DCED) has requested an extension for program receipt authorization. She indicated that the two sections had been added through the Governor's Office to assist the Division of Elections equipment needs. Representative Martin MOVED to adopt Amendment #3. There 8 being NO OBJECTION, it was adopted. Representative Therriault MOVED to adopt Amendment #4. [Copy on file]. Co-Chair Hanley OBJECTED because it was a regional district appropriation. Representative Therriault provided the Committee with a handout explaining the amendment. [Copy on file]. THOMAS BRINGHAM, DIRECTOR, DIVISION OF STATEWIDE PLANNING, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, stated that the effect of the amendment would delay the Whittier project by approximately one year. He added that the Department does not support the reallocation. Two design contracts have gone to bid. Approximately, $25 million dollars of ISTEA money is available for the project. Representative Therriault spoke in support of Amendment #4 and provided an in depth analysis of the accompanying material. Representative Kohring voiced support for Amendment #4, pointing out that it would provide for repairs and renovations to school facilities throughout the State of Alaska. Mr. Bringham noted that the amendment would implement impacts to the Department by delaying construction on the Whittier Road, depleting that account by $2 million dollars. Those funds would need to be replaced with highway funds. Other projects would then have to be delayed. Representative Therriault suggested that he would be willing to reduce the requested amount from $10 million dollars to $5 million dollars in order to make the project work. Representative Therriault MOVED to cut the amount proposed in Amendment #4 in half. Representative Martin OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Parnell, Therriault, Kelly. OPPOSED: Navarre, Brown, Grussendorf, Kohring, Martin, Mulder, Hanley, Foster. The MOTION FAILED (3-8). A roll call was taken on the MOTION to adopt Amendment #4. IN FAVOR: Therriault, Kelly, Kohring, Navarre. OPPOSED: Parnell, Brown, Grussendorf, Martin, Mulder, Foster, Hanley. The MOTION FAILED (4-7). Representative Brown explained that Amendment #5 was part of 9 the Governor's capital budget request and is a "high" priority of the Administration. Ms. McConnell agreed that the amendment was the "highest priority" for the Administration of items which currently are not included in the budget draft. Ms. Clarke added that construction of the Johnson Youth Center Treatment Unit was also a high priority for the Department of Health and Social Services. Representative Grussendorf pointed out that the facility has only eight beds and the amendment would provide an additional twenty beds. Representative Brown MOVED to adopt Amendment #5. Co-Chair Hanley OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Therriault, Brown, Grussendorf, Navarre. OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Hanley, Foster. The MOTION FAILED (4-7). Representative Brown spoke to Amendment #6. [Copy on file]. Amendment #6 would provide a deletion to the Department of Fish and Game's, "Trapper, hunter education material and newsletter" component. She noted that the Legislature appropriated $200 thousand dollars in FY95 for a similar project. Representative Therriault noted that the existing video does not cover the same concepts proposed for the new video. Representative Brown pointed out that the request had been added to the budget proposal on the Senate side. Representative Kelly corrected that the request had been submitted by the Department of Fish and Game. Representative Grussendorf noted that the Department is trying to educate trappers to use more humane ways of catch and kill. Representative Brown MOVED to adopt Amendment #6. Representative Grussendorf OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Martin. OPPOSED: Grussendorf, Kelly, Kohring, Mulder, Navarre, Parnell, Therriault, Hanley, Foster. The MOTION FAILED (2-9). Representative Brown MOVED to adopt Amendment #7. [Copy on file]. Co-Chair Hanley OBJECTED. 10 LAURIE OTTO, DEPUTY ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF LAW, stated that funding Amendment #7 was a high priority for the Administration, included in a set of revenue bonds. The criminal justice system is completely dependant on computerized records. Systems currently used are obsolete; she emphasized many departments are dependent upon the system for accurate records. A roll call was taken on the MOTION. IN FAVOR: Navarre, Brown, Grussendorf. OPPOSED: Kohring, Martin, Mulder, Parnell, Therriault, Kelly, Foster, Hanley. The MOTION FAILED (3-8). Representative Brown MOVED to adopt Amendment #8. [Copy on file]. She understood that people living in that area do not want the highway paved; the amendment would provide a deletion to the expenditure requested. Representative Therriault pointed out that the project had been added on the Senate side. The Commissioner has indicated that only one of the projects could be completed. Co-Chair Hanley OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Navarre, Therriault, Brown, Grussendorf, Kohring. OPPOSED: Martin, Mulder, Parnell, Hanley, Foster. Representative Kelly was not present for the vote. The MOTION FAILED (5-5). (Tape Change HFC 96-166, Side 2). Amendment #9 compiles requests from the Office of the Governor, Division of Budget Review. [Copy on file]. Ms. Slagle stated that Section #1, Department of Administration (DOA) was a resubmitted request in the amount of $95 thousand dollars for the public defender agency. Section #2, also, was a resubmission which had been removed on the Senate floor. The change would be a funding shift for payment to revenue sharing for a Native village, Kluti- Kaah. Section #3 would provide $500 thousand dollars program receipts to pay for raw materials and other related costs of the correctional industries program. 11 Section #4, a new request, would provide for $50 thousand dollars in program receipts for payment of additional costs to the State museum programs. Section #5, Department of Law, (a) provides for a listing of judgments previously submitted by the Department. Subsections (b) & (c) are new requests by the Department of Law. Co-Chair Hanley asked if these were judgments or settlements pending against the State. RICHARD PEGUES, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION, DEPARTMENT OF LAW, replied that they were both settlements and judgments; most of the accounts are accruing interest. He added that settlements are contingent on the appropriation. Representative Navarre asked if Subsection (c) had been settled. Ms. McConnell responded that section was a repeated request for Alaska Legal Services. Discussion followed between Ms. McConnell and Committee members regarding Alaska Legal Services. Ms. Slagle noted that Section #6, Department of Transportation and Public Facilities (DOT&PF) was a repeat of the Copper River highway restoration request. Section University contracts. Section #8 addresses miscellaneous claims and Section #9 provides for the ratification. Co-Chair Hanley suggested moving all the new sections; Section #3, Section #4, Section #5 (a) & (b), Section #8 and Section #9. Representative Mulder MOVED the language referenced by Co- Chair Hanley. There being NO OBJECTION, the new sections were adopted into the supplemental budget request. Co-Chair Hanley MOVED TO RESCIND action on failure to adopt Section #4(b). There being NO OBJECTION, it was rescinded. Co-Chair Hanley MOVED to delete Section #4(b). There being NO OBJECTION, it was deleted. Representative Brown MOVED to adopt Section #7, contract language for the University of Alaska. Co-Chair Hanley OBJECTED. Following discussion on the contract negotiations, Representative Brown WITHDREW the MOTION to move Section #7. Representative Navarre MOVED to adopt Section 5(c), the Department of Law request for expanded funding to Alaska Legal Services. Representative Mulder OBJECTED. A roll call was taken on the MOTION. 12 IN FAVOR: Navarre, Brown, Grussendorf, Foster. OPPOSED: Mulder, Parnell, Therriault, Kelly, Kohring, Martin, Hanley. The MOTION FAILED (4-7). Representative Brown MOVED to adopt Section #1, Department of Administration request for the public defender. Co-Chair Hanley OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Navarre, Brown, Grussendorf, Foster. OPPOSED: Mulder, Parnell, Therriault, Kelly, Kohring, Martin, Hanley. The MOTION FAILED (4-7). Representative Navarre MOVED to adopt Section #2 (2), Department of Community and Regional Affairs (DCRA), Municipal Revenue Sharing. Co-Chair Hanley OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre, Foster. OPPOSED: Parnell, Therriault, Kelly, Kohring, Martin, Mulder, Hanley. The MOTION FAILED (4-7). Representative Brown requested further information regarding the Copper River Highway. SAM KITO, III, LEGISLATIVE LIAISON/SPECIAL ASSISTANT, OFFICE OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, stated that request resulted from a settlement entered into with Department of Justice regarding the Copper River Highway litigation. It includes several components, plus litigation settlement costs. Representative Navarre asked how much to date had been spent on the litigation. Mr. Kito advised that the consequences of not funding the settlement would place the State back in court with legal costs mounting. Representative Navarre MOVED to incorporated Section #6. Representative Martin OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre, Parnell. OPPOSED: Therriault, Kelly, Kohring, Martin, Mulder, Foster. 13 Representative Hanley was not present for the vote. The MOTION FAILED (4-6). Representative Kohring MOVED to adopt Amendment #10. [Copy on file]. Representative Mulder OBJECTED for purposes of discussion. Representative Kohring explained that the amendment would increase program receipts for low-income housing weatherization. JOHN BITNEY, ALASKA HOUSING FINANCE CORPORATION (AHFC), DEPARTMENT OF REVENUE, provided more detail on the proposed project, noting that anticipated federal receipts for the program are declining. The amendment would bring the federal receipt authority in line with what originally was anticipated to be received. Representative Mulder WITHDREW the OBJECTION. There being NO further OBJECTION, it was adopted. Co-Chair Hanley MOVED to adopt Amendment #10. [Copy on file]. He stated that the two sections had been drafted incorrectly. The amendment provides a technical correction. There being NO OBJECTION, it was adopted. Representative Brown MOVED to adopt Amendment #12. [Copy on file]. The amendment would add $25 thousand general fund dollars to the Statewide Library and Electronic Doorway (SLED) appropriation. KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION, spoke to the need for the requested funding addition. Representative Kelly OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Kohring, Navarre, Foster. OPPOSED: Kelly, Martin, Mulder, Parnell, Therriault, Hanley. The MOTION FAILED (5-6). Mr. Walsh spoke to Amendment #13 by Representative Foster. [Copy on file]. The amendment would delete Section #5 which had been addressed through previous language. Co-Chair Foster MOVED to adopt Amendment #13. There being NO OBJECTION, it was adopted. Mr. Walsh spoke to Amendment #14. [Copy on file]. 14 TOM WRIGHT, STAFF, REPRESENTATIVE IVAN IVAN, explained that there had been a drafting error and that the concerns had been adopted on the Senate floor but not incorporated. Co- Chair Foster MOVED to adopt Amendment #14. There being NO OBJECTION, it was adopted. Representative Kelly spoke to Amendment #15. [Copy on file]. (Tape Change HFC 96 - 166, Side 1). Representative Kelly MOVED to adopt Amendment 15 (copy on file). Amendment 15 would delete page 14, lines 17 - 18. Ms. Slagle explained that the amendment would delete an appropriation from the Fish and Game Fund for the assertion of state's rights in litigation. She observed that the request duplicates funding in the supplemental. She added that $200.0 thousand dollars was lost for the Endangered Species Act. There being NO OBJECTION, Amendment 15 was adopted. Representative Martin MOVED to adopt Amendment 16 (copy on file). Amendment 16 would delete page 8, lines 6 - 8. He explained that the amendment would transfer grants to the Alaska Craftsman Home Program and the Energy Rated Homes of Alaska from the Department of Community and Regional Affairs and place them under the Alaska Housing Finance Corporation (AHFC). He noted that an audit by the Legislative Budget and Audit Committee showed problems with these programs. TIM SULLIVAN, EXECUTIVE DIRECTOR, ALASKA CRAFTSMAN HOME PROGRAM observed that the Alaska Craftsman Home Program and the Energy Rated Homes of Alaska have been incorporated into the State's budget since 1990. Both programs are private non-profit corporations. He maintained that a lack of service would result in a discomfort to the housing industry. He noted that the Energy Rated Homes of Alaska Program is housed within AHFC. He asserted that the programs represent a good example of public\private partnership. He observed that an audit by the AHFC of the Energy Rated Homes of Alaska Program fund some disallowable costs. A second private audit concluded that Energy Rated Homes of Alaska had expended their funds in accordance with the provisions of the grant from AHFC. DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE CORPORATION stated that AHFC did not audit Energy Rate Homes of Alaska. He noted that AHFC audited Innovative Communications. He stressed that the Corporation does not 15 have a contract with Energy Rate Homes of Alaska. He maintained that AHFC supports the programs. He stressed that public hearings concluded that the public wanted access to stripper well monies and an open bid process. He noted that the grant to Innovative Communications was cancelled. It was a competitively awarded grant and could not be transferred to another corporation. Representative Mulder questioned if the programs are supported by the home builders. Mr. Fauske stated that there have been some questions on the funding. He stressed that a private audit will be completed. He noted that the audit has not been completed. He observed that the Alaska Craftsman Home Program has not been audited. Energy Rated Homes of Alaska had its own internal audit. Representative Martin stressed that there should be an open bid process. Mr. Fauske stated that the grant under question was competitively awarded to Innovated Communications. The grant was cancelled before completion. Co-Chair Hanley questioned if an independent auditor has been suggested by the Attorney General's Office. Mr. Fauske noted that discussions with the grantee occurred regarding an independent auditor. Co-Chair Hanley noted that the audit is under appeal. He asked if AHFC generally cancels grants under appeal. Mr. Fauske stressed that there were several complicating factors. He added that the Attorney General's Office was involved in the process. Mr. Fauske stated that AHFC is against designated grants. Co-Chair Hanley noted that Alaska Craftsman Home Program has received designated grants for many years. Mr. Fauske observed that Energy Rated Homes of Alaska has not previously received a designated grant. He added that the Board of Directors for AHFC has determined that all AHFC grants should be competitively bid. Representative Brown noted that the programs have always been under the Executive Budget Act. Mr. Sullivan noted that the programs have had to comply with the State's single audit act. He noted that the programs have had to comply with federal audit requirements. He added that both are private non-profit corporations. They are both listed specifically in statute as compliance methods for occupational licensing and rating thermal standards. He maintained that this is the reason that they have been line items in the budget. 16 Mr. Fauske reiterated that AHFC did not have a contract with Energy Rated Homes of Alaska. Representative Kohring noted that the programs are under AHFC. He maintained that the programs are working. Mr. Sullivan stressed that the programs were originally developed under the Department of Community and Regional Affairs. He noted that when energy programs were merged with the Department of Community and Regional Affairs and the Alaska State Housing Authority was merged with Alaska Housing Finance Corporation the programs moved into AHFC. He observed that the Alaska State Home Builder's Association is on record in support of the transfer of Energy Rated Homes of Alaska and Alaska Craftsman Home Program into to Department of Community and Regional Affairs. He maintained that the Department of Community and Regional Affairs is better equipped to handle grants with private non-profit corporation. Representative Brown spoke against the amendment. Representative Martin spoke in support of the amendment. He stressed that the grants should be competitively bid. Representative Mulder spoke against the amendment. He stressed that the programs are working well. A roll call vote was taken on the MOTION to adopt Amendment 16. IN FAVOR: Kohring, Martin, Navarre OPPOSED: Mulder, Parnell, Therriault, Brown, Grussendorf, Kelly, Foster, Hanley The MOTION FAILED (3-8). Representative Mulder MOVED to adopt Amendment 17 (copy on file). He explained that the amendment would insert on page 8, line 9: "The source of these funds shall be general Stripper Well Oil Overcharge funds appropriated to Alaska Housing Finance Corporation Projects in the Department of Revenue"; deleted on page 20, line 8, "3.0 million dollars" and insert $600.0 thousand dollars"; and delete page 20, lines 10 - 14. Mr. Fauske spoke against the amendment. He noted that Stripper Well Oil Overcharge funds are restitution money paid to the State of Alaska for overcharges to all residents of the State. He noted that a committee was formed to design a budget and an expenditure plan for the monies. He observed that the amendment would tie up the funds so that 17 they could not be utilized for any other programs. He emphasized that other competitive bidders in this line of work have asked for access to bid some of the work. Representative Mulder spoke in support of the Amendment 17. He stressed that Energy Rated Homes of Alaska and Alaska Craftsman Home Program are important programs that are serving a constituency. He spoke in support of maintaining a revenue stream for these programs. He maintained that AHFC is seeking to put this $3.0 million dollars back into the corpus of the Fund. Mr. Fauske pointed out that they are federal receipts that reside within the Corporation. Representative Mulder stressed that the amendment would maintained the funds for the future. Representative Martin spoke against the amendment. Mr. Fauske stressed that the Stripper Well Plan recognized that the funds are finite. The Plan asks the Legislature to request AHFC to review the activities to be conducted under the Plan in order to assure that they serve the general population without regard to income level. He noted that the Plan was part of AHFC's budget. Representative Martin expressed concern that Amendment 17 amounts to an exclusive contract to fund private non-profit corporations. Representative Mulder reiterated that the funding is finite. Mr. Fauske stressed that the Plan would utilize the remaining funds. Representative Mulder stressed that the money can be appropriated to other programs in the future if the legislature decides to redirect them. Mr. Fauske stressed that AHFC is not opposed to the programs. He emphasized that public comment demonstrated the need for access to the dollars. Representative Mulder asserted that the money will be saved for the future. Co-Chair Hanley summarized that $600.0 thousand dollars of the $3.0 million would be used for designated grants to Energy Rated Homes of Alaska and Alaska Craftsman Home Program. Mr. Fauske pointed out that the Energy Rate Homes and Alaska Craftsman Home Programs could bid on the remaining money. Representative Brown cited statutes which refer to the Energy Rated Homes of Alaska and Alaska Craftsman Home 18 Programs. She spoke in support of the amendment. A roll call vote was taken on the MOTION to adopt Amendment 17. IN FAVOR: Brown, Navarre, Kelly, Mulder, Parnell, Therriault, Foster OPPOSED: Martin, Kohring, Hanley Representative Grussendorf was absent from the vote. The MOTION PASSED (7-3). Representative Martin asked if the passage of Amendment 17 would delete funding for energy programs for Alaska. JOHN BITNEY, STAFF, ALASKA HOUSING FINANCE CORPORATION noted that the only stripper well monies expended are the two designated grants under the Department of Community and Regional Affairs. He observed that AHFC has $600.0 thousand dollars in receipt authority designated to be transferred to two designated grants under the Department of Community and Regional Affairs. The statute still requires AHFC to have the programs. Representative Therriault MOVED to adopt Amendment 18 (copy on file). He explained that the amendment would delete "$6.0 million dollars" and insert "5.5 million dollars" on page 23, line 7; and authorize $500.0 thousand dollars for the Chena Hot Springs Road. He explained that the amendment would transfer funding from the Denali Highway. (Tape Change, HFC 96-166, Side 2) SAM KITO III, SPECIAL ASSISTANT, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES clarified that the Department is bound by federal requirements to comply with the federal processes and planning requirements. He stated that he did not know where the Chena Hot Spring road falls under federal priorities. He noted that federal authorization to receive and expend from project to project can be reallocated if there is a shortage in a project. Representative Therriault noted that $3.0 million dollars is the estimated amount needed to complete the project. He observed that part of the project was completed last fall. He questioned if the project cost can be increased without additional authorization. Mr. Kito noted that authorization can be increased through the Legislative Budget and Audit Committee in exchange for decreased authority in another project. 19 There being NO OBJECTION, Amendment 18 was adopted. Representative Brown MOVED to rescind the Committee's action in failing to adopt Amendment 8. She explained that the amendment would delete the balance of funds from the Denali Highway resurfacing project. There being NO OBJECTION, it was so ordered. Co-Chair Hanley OBJECTED to the motion to adopt Amendment 8. A roll call vote was taken on the MOTION. IN FAVOR: Navarre, Therriault, Brown, Grussendorf, Kelly, Kohring OPPOSED: Parnell, Martin, Mulder, Hanley, Foster The MOTION PASSED (6-5). Representative Therriault MOVED to rescind the Committee's action in failing to adopt Amendment 12. There being NO OBJECTION, it was so ordered. Representative Martin OBJECTED to the motion to adopt Amendment 12. A roll call vote was taken on the MOTION. IN FAVOR: Brown, Grussendorf, Navarre, Kelly, Kohring, Mulder, Parnell, Therriault, Foster, Hanley OPPOSED: Martin The MOTION PASSED (10-1). Co-Chair Hanley MOVED to adopt Amendment 19 (copy on file). The amendment would extend the roll forward for the Arctic National Wildlife Refuge education effort. There being NO OBJECTION, it was so ordered. Representative Martin requested that Alaska Housing Finance Corporation projects remain open. Co-Chair Hanley suggested that projects be reviewed to see if they fit under categories that are appropriate. Representative Brown asked if the legislation contains the use of Alaska Housing Finance Corporation funds for non- housing purposes. Ms. McConnell noted that there are water/sewer projects that would not be related specifically for housing. The whole municipal water/sewer program is funded with funds from the Alaska Housing Finance Corporation. 20 Ms. McConnell observed that the Department of Environmental Conservation and Alaska Housing Finance Corporation (AHFC) worked together to provide AHFC with information about the projects. Representative Martin expressed concern with funding for a road and pipeline project in Petersburg. Representative Grussendorf commented that the water source in Petersburg is not adequate. He noted that the community has recently received authorization for a $1.0 million dollar federal grant. The state funding is needed to complete the reservoir dam. Ms. McConnell clarified that the Administration did not want more than $53.0 million dollars in AHFC corporate receipts to be used for these projects. Representative Kohring noted that AHFC assumed some of the responsibilities of the Department of Community and Regional Affairs, including water and sewer needs related to infrastructure. In response to a question by Representative Brown, Ms. McConnell noted that projects were added from the municipal matching priority list. Representative Navarre MOVED to incorporate the adopted reappropriation and amendments into HCS CSSB 136 (FIN). There being NO OBJECTION, it was so ordered. Representative Navarre MOVED to report HC CSSB 136 (FIN) out of Committee with individual recommendations. ADJOURNMENT The meeting adjourned at 4:20 a.m. 21