HOUSE FINANCE COMMITTEE April 30, 1999 2:00 P.M. TAPE HFC 99 - 115, Side 1. TAPE HFC 99 - 115, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 2:00 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Vice-Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative J. Davies Representative G. Davis Representative Williams was not present for the meeting. ALSO PRESENT Representative Andrew Halcro; Senator Jerry Mackie; Mike Tibbles, Staff, Representative Gene Therriault; Lisa Torkelson, Staff, Representative Fred Dyson; Joe Balash, Staff, Representative Gene Therriualt; Tina Lindgren, Executive Director, Alaska Visitors Association (AVA), Anchorage; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Jack Kreinheder, Senior Policy Analyst, Office of Budget and Management; Ginny Fay, Acting Director, Division of Tourism, Department of Commerce and Economic Development. SUMMARY HB 34 An Act relating to the crime of misprision of a crime against a child. CS HB 34 (FIN) was reported out of Committee with a "do pass" recommendation and with indeterminent fiscal notes by the Department of Administration and the Department of Law dated 4/21/99. HB 40 An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development and the commissioner of commerce and rural development; adjusting the membership of certain multi- member bodies to reflect the transfer of duties among departments and the elimination of departments; creating the office of international trade and relating to its duties; and providing for an effective date. HB 40 was HELD in Committee for further discussion. SB 107 An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date. CS SB 107 (FIN) was reported out of Committee with "no recommendation" and with two new fiscal notes by the House Finance Committee. HOUSE BILL NO. 34 An Act relating to the crime of misprision of a crime against a child. Representative Foster MOVED to RESCIND action taken on moving HB 34 out of Committee. There being NO OBJECTION, it was rescinded. Representative J. Davies MOVED to RESCIND action taken on adopting the original Amendment #1. [Copy on File]. There being NO OBJECTION, action was rescinded. Representative J. Davies MOVED to adopt the new Amendment Chair Therriault OBJECTED for the purpose of discussion. Representative J. Davies explained that the amendment would address concerns previously expressed by Committee members. He indicated that Amendment #I.3 was fundamentally the same as the amendment adopted previously, however, it had been structured differently to be more complete including references and definitions. LISA TORKELSON, STAFF, REPRESENTATIVE FRED DYSON, noted that Representative Dyson agrees with the changes made by the amendment. Co-Chair Therriault WITHDREW his OBJECTION to adopting the amendment. There being NO further OBJECTIONS, it was adopted. Representative Bunde MOVED to report CS HB 34 (FIN) out of Committee with individual recommendations and with the attached fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 34 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal notes by the Department of Administration and the Department of Law dated 4/21/99. CS FOR SENATE BILL NO. 107(FIN) An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date. JOE BALASH, STAFF, REPRESENTATIVE GENE THERRIAULT, pointed out that CS SB 107 (FIN) was the companion bill to HB 136 which previously had been heard in the House Finance Committee. Mr. Balash spoke to the changes between the two bills. TINA LINDGREN, EXECUTIVE DIRECTOR, ALASKA VISITORS ASSOCIATION (AVA), ANCHORAGE, touched upon the plan of the bill. She commented that the bill before the Committee is the product of several years effort. The actual wording was agreed to by the Alaska Visitors Association and the Administration. She hoped that the bill would pass. A transition team has already begun the work of establishing a new organization and to date, a number of people have enrolled. The idea is that industry will create a new organization that combines the Alaska Tourism Marketing Council (ATMC) and the Alaska Visitors Association (AVA) and the marketing functions of the Division. Passing the bill will provide that the process move forward. Representative J. Davies asked how realistic is it to assume that financing will be raised through the private sector. Ms. Lindgren stated that this will not be an easy challenge, however, there has been a $2 million dollar commitment from major players. She acknowledged that the community portion of $1 million dollars will be more difficult to raise. Representative J. Davies advised that he would continue to support implementation of a statewide tourism tax. SENATOR JERRY MACKIE spoke in support of the Senate Finance Committee (SFC) version of the legislation. He pointed out that everything in that version concurred with the proposed House Finance Committee (HFC) version and that the SFC had adopted the fiscal notes brought forward by the HFC. He confirmed that the fiscal notes are appropriate and support the changes made to the legislation. Mr. Baylash explained the difference between the fiscal notes prepared by the SFC and the HFC. He advised that the two fiscal notes proposed by HFC address the tourism BRU within the Department of Commerce and Economic Development; SFC did adopt fiscal notes identical in numbers to the ones drafted. In FY00, the pertinent note for the Alaska Tourism Marketing Council (ATMC) numbers indicate personal services, travel and contractual and are listed as requested in the Governor's budget. In the Tourism Development component, the FY00 Division of Tourism fiscal note, there is a $200 hundred thousand-dollar difference in the contractual line. Mr. Baylash suggested that the Department no longer needs authority to receive and expend that funding. Additionally, there is a $100 thousand dollar reduction to the personal service line. That number was based on a FY01 projection. The Director of the Division has resigned and it is believed that additional turnover will occur. Rather than deleting specific positions, $100 thousand dollars was deleted from the entire line in order that it could be absorbed in other areas of their program. Mr. Baylash continued, the reduction was based on part to the millenium plan and partially to the legislation. The other $700 hundred thousand dollars will be used for the operations and staffing for the Division of Tourism. In subsequent years, FY02 and FY03, the contractual line will decrease each year by $500 thousand dollars as the State's contribution to the marketing effort is ratcheted down. GINNY FAY, ACTING DIRECTOR, DIVISION OF TOURISM, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, spoke to the difference in the fiscal notes. She pointed out that the ATMC fiscal note submitted by the Division is close to the same as the HFC proposed note. The big difference is to the Tourism Development note. The note submitted by the Department is based on current tourism funding by the State. Presently, the State of Alaska pays $5.3 million dollars total tourism funding, of which, $3.3 million dollars of that is a contract through ATMC, $1.2 million dollars is program receipts, and that industry provides a 25% match for the Tourism Marketing contract, and $2.2 million to the Division of Tourism. Ms. Fay continued, the marketing provided by the State of Alaska is done in two pieces. One portion is handled by ATMC and the other is international marketing addressed by the Division of Tourism. The Department's fiscal note envisions that after the merger occurs, the marketing done by contract now through the Division and that done by contract through ATMC will be one large contract with the qualified trade association. The Department's contractual line indicates the addition of both of those marketing contracts. Ms. Fay advised that the personal service line is an area of major difference. Between the two fiscal notes, there will be six state employees that vacate. The Department does not know what the qualified trade association will be doing as all the marketing currently is done by the State through contract. She assumed that the Administration would be handling the additional work of ATMC without additional staff. That Division continues to do the work that they are currently doing now and will assumed the new obligations. She emphasized that the current workload can not be handled without any additional staff. Senator Mackie understood the Department's concern, however, addressed the need of compromising considering the State's economic budget. He stated that the Division of Tourism does not need to remain the same as it is now since they will not no longer be marketing. He noted that what is reflected in the fiscal notes involves general funding, program receipts and designated program receipts. In the current year, the State is spending just over $7 million dollars for tourism. In the prepared legislative fiscal notes, that amount will be $6.7 million dollars a $300 thousand dollars reduction. He believed that reduction would not decimate the Division of Tourism and could provide a reasonable funding level for the transition. Representative J. Davies inquired if there are other function areas of tourism besides the marketing effort. Ms. Fay explained that there are many services provided that are not related to marketing as travel into the State, permitting on federal lands and land use planning. The Department also works closely with communities as they try to develop tourism in their areas. She emphasized that there continues to be growth and need for information on developing tourist opportunities especially in rural Alaska. Currently there is insufficient staffing to do the development functions related to tourism. Ms. Fay advised that it would be difficult to assume the role of overseeing in-put on the large contract with current staffing. Agreement has occurred among all businesses because the State was willing to oversee the contract to guarantee that businesses and communities benefit from tourism activities within the State. Ms. Fay argued that the current Division of Tourism fiscal note will begin to de-staff that Division, loosing the ability to have a reasonably active role in the contract. Representative J. Davies commented that the funding cut could decimate the work of the Division. Co-Chair Therriault interjected that the proposed funding should be adequate. Senator Mackie agreed that nothing was being decimated with the proposed level of funding. Ms. Fay pointed out that in FY00, the Division would not remain whole with a $100 thousand dollar reduction, affecting five positions. Representative J. Davies MOVED an amendment to the Division of Tourism fiscal note. He proposed a change to the FY01 note adding $100 thousand dollars to personal services, adding $40 thousand dollars to the travel line, and subtracting $200 thousand dollars from the contractual line making it would be a net zero amendment. The employee position line would increase from six to eight. Representative Austerman OBJECTED. (Tape Change HFC 99 - 115, Side 2). Representative Austerman suggested that the biggest change would be in FY01. The difference then between what the Department wants and what the Legislature would be doing would not be that significant. Senator Mackie noted that the net change would be zero, however, the effect would be $200 thousand dollars less in marketing, going to personal services and travel. The $200 thousand dollars that would be reduced to marketing would create an additional loss of $500 thousand dollars because of the 60% match. Representative J. Davies explained that the intent by making the shift was to have a continued effort in rural development tourism. Representative Austerman stated that effort would be made through a $60 thousand dollar grant already included. Representative J. Davies emphasized that the present level of funding is not adequate. A roll call vote was taken on the motion made on the Division of Tourism fiscal note. IN FAVOR: Moses, J. Davies, Grussendorf OPPOSED: Austerman, Bunde, G. Davis, Foster, Kohring, Therriault Representatives Williams and Co-Chair Mulder were not present for the vote. The MOTION FAILED (3-6). Representative Bunde MOVED to report CS SB 107 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS SB 107 (FIN) was reported out of Committee with "no recommendation" and with two fiscal notes by the House Finance Committee. HOUSE BILL NO. 40 An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development and the commissioner of commerce and rural development; adjusting the membership of certain multi- member bodies to reflect the transfer of duties among departments and the elimination of departments; creating the office of international trade and relating to its duties; and providing for an effective date. JACK KREINHEDER, SENIOR POLICY ANALYST, OFFICE OF BUDGET AND MANAGEMENT, offered to answer questions on the technical placement of verbiage. In response to Representative Austerman, Mr. Kreinheder advised that there are no new programs contained in the legislation. Co-Chair Therriault added that the drafter had been requested to "keep a look out" for anything that appeared to be new. Co-Chair Therriault MOVED to adopt Amendment #1. [Copy on File]. He advised that the Department of Education had requested the amendment. MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIUALT, explained that Amendment #1 would move all the licensure of child care facilities from Title 47, Chapter 35, the Welfare, Social Services Institution chapter and would place them into Title 14, Chapter 37. Mr. Tibbles noted that a request was made that an effective date of July 1, 2000 be added, which would provide the Department enough time. Mr. Tibbles advised that the delayed effective date was not printed in the amendment. Representative J. Davies MOVED to AMEND Amendment #1 by adding the effective date, July 1, 2000. Representative Kohring observed that the proposed change would be consistent with the work done by the Committee. It was the subcommittee's intent that child care programs go into one department. There being NO OBEJCTION, the amendment to the amendment was adopted. There being NO OBJECTION to the adoption of the new Amendment #1, it was adopted as amended. Co-Chair Therriault MOVED to adopt Amendment #2. [Copy on File]. Mr. Tibbles explained that the amendment would provide another effective date change on all the provisions that relate to the transfer of the Alaska Human Resource Investment Council from the Office of the Governor to the Department of Labor and Workforce Development. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to adopt Amendment #3. [Copy on File]. Mr. Tibbles commented that the amendment would provide a technical change from the Project Loan Committee commissioner, which would create a decline in public members from four to three. The total membership of that Committee will be five. There being NO OBJECTION, Amendment #3 was adopt. Co-Chair Therriault MOVED to adopt Amendment #4. [Copy on File]. Mr. Tibbles pointed out that the amendment would be placed in the repealler section of the bill, therefore, deleting the existing statutory reference of the Manpower Training Program. Mr. Kreinheder agreed that program no longer existed and that the statute was obsolete. There being NO OBJECTION, Amendment #4 was adopted. Co-Chair Therriault MOVED to adopt Amendment #5. [Copy on File]. Mr. Tibbles noted that Amendment #5 states that the Governor shall appoint the executive director of the Alaska Human Resource Investment Council. Currently, statutes provide that it exist in the Governor's Office. The bill is proposing to move that to the new Department of Labor & Workforce Development. Mr. Kreinheder noted that the Administration did support the change. There being NO OBJECTION, Amendment #5 was adopted. Co-Chair Therriault MOVED to adopt Amendment #6. [Copy on File]. Mr. Tibbles explained that the amendment would add another section to the repealler statute thereby deleting the existing statutory reference to that advisory committee. He pointed out that money continues to be collected, however, there are no more loans. Mr. Kreinheder spoke to the Administration's support of the amendment. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to adopt Amendment #7. [Copy on File]. Mr. Tibbles advised that the amendment was a request from the Department of Labor. They asked that the section dealing with the Business Incentive Training Program be moved from Title 23, Chapter 5, to Title 23, Chapter 15. There being NO OBJECTION, Amendment #7 was adopted. Representative Austerman WITHDREW Amendment #8. [Copy on File]. Representative Austerman MOVED to adopt Amendment #9. [Copy on File]. Co-Chair Therriault OBJECTED for the purpose of discussion. Representative Austerman explained that the amendment would delete material from Page 4, Line 21 through Page 5, Line 23, which would remove funding for the child care facility assistance. He recommended that funding be moved to the Childcare Assistance Program. Representative J. Davies OBJECTED. He stated that he would object on two grounds: * The bill intends only to move things around and not make substantive changes. * Additionally, the grant program is different than day care assistance and it exists so as to insure that day care programs deliver developmentally appropriate assistance, education and care of children. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGMENT AND BUDGET, OFFICE OF THE GOVERNOR, noted that the Administration strongly objects to making a change of this magnitude. There has been no opportunity for the public to know what is under consideration. She recommended that this could be discussed next year. Passage of the amendment would put into jeopardy many facilities and families. In response to Representative Austerman, Representative J. Davies explained that the program was not used to help the facilities operate but rather it was used to add quality pieces to their operations. It is based on $50 per month, per child, and must be applied for. Representative G. Davis voiced concern with the issues and legal aspects which could result from the proposed change. Representative Kohring suggested that this concern be addressed through next year's budget cycle. A roll call vote was taken on the motion. IN FAVOR: Austerman, Bunde OPPOSED: J. Davies, G. Davis, Foster, Kohring, Moses, Therriault Representatives Williams, Grussendorf, and Mulder were not present for the vote. The MOTION FAILED (2-6). Co-Chair Therriault explained that his "no" vote should not be indicative that he will not consider elimination to that program in the future. He noted that having worked with the Administration and the prime sponsor of the bill, the action could overturn the delicate balance currently achieved. Representative J. Davies MOVED to adopt Amendment #10. [Copy on File]. Co-Chair Therriault OBJECTED for the purpose of discussion. Representative J. Davies stated that consolidation effort has been the focus on economic development efforts in rural Alaska. The amendment would add to the commissioner's responsibilities, advising on issues and making recommendations. Co-Chair Therriault WITHDREW his OBJECTION to the amendment. There being NO further OBJECTION, it was adopted. Ms. McConnell addressed the anticipated savings through the fiscal note. She noted that there are several positions which will be eliminated, however, initially, a lot of work will be needed to address serious issues. Co-Chair Therriault advised that fiscal notes would be ready for the Committee's preview at a forthcoming meeting. HB 40 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:40 P.M. H.F.C. 11 4/30/99