MINUTES SENATE FINANCE COMMITTEE February 17, 1994 9:15 a.m. TAPES SFC-94, #27, Side 1 (000-end) SFC-94, #27, Side 2 (end-120) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:15 a.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kelly, Rieger, and Kerttula were present. Senators Sharp and Jack were absent. ALSO ATTENDING: Representative Harley Olberg; Annette Kreitzer, aide to Senator Leman, sponsor of SB 33; Ervin Paul Martin, Director, Alaska Division of Emergency Services, Department of Military & Veteran Affairs; Mike Conway, Director, Division of Spill Prevention & Response, Department of Environmental Conservation; James Studley, Vice Chairman, LEPC Association, Haines; Randy Welker, Legislative Auditor, Legislative Audit Division; Virginia Stonkus, fiscal analyst, and Mike Greany, Director, Legislative Finance Division; aides to committee members and other members of the legislature. SUMMARY INFORMATION CSSB 33(STA): An Act relating to emergency planning and response; transferring the Hazardous Substance Spill Technology Review Council to the Department of Environmental Conservation; transferring the Alaska State Emergency Response Commission, including its duty to designate local emergency planning districts and appoint local emergency planning committees, to the Department of Military and Veterans' Affairs; and eliminating a requirement that the state and regional oil discharge prevention and contingency plans be revised annually. CSSB 33(FIN) work draft dated 2/16/94 was brought before the committee for discussion purposes. Annette Kreitzer, aide to Senator Leman, sponsor of SB 33, spoke to CSSB 33(FIN) and explained the amendments. Ervin Paul Martin, Director, Alaska Division of Emergency Services, Department of Military & Veteran Affairs; Mike Conway, Director, Division of Spill Prevention & Response, Department of Environmental Conservation; and James Studley, Vice Chairman, LEPC Association, Haines, also came before the committee and testified in support of SB 33. Discussion was had by the committee on various budget issues and positions being transferred between departments. CSSB 33(FIN) was REPORTED OUT of committee with individual recommendations with a new fiscal note from Senate Finance for Department of Military & Veterans Affairs for $646.7, and a fiscal note for the Department of Environmental Conservation for $(646.7). HB 372: An Act relating to the four dam pool transfer fund. Co-chair Pearce voiced her preference that HB 372 would move out of committee and SB 243 would be held. Senator Rieger voiced his concern over passing HB 372 without correcting the problems in the legislation. Co-chairs Pearce and Frank concurred. HB 372 was REPORTED OUT of committee with individual recommendations and a zero fiscal note for the Dept. of Community & Regional Affairs. SB 243: An Act relating to the four dam pool transfer fund. SB 243 was scheduled but not heard. It was HELD in committee. CS FOR SENATE BILL NO. 33(STA): An Act relating to emergency planning and response; transferring the Hazardous Substance Spill Technology Review Council to the Department of Environmental Conservation; transferring the Alaska State Emergency Response Commission, including its duty to designate local emergency planning districts and appoint local emergency planning committees, to the Department of Military and Veterans' Affairs; and eliminating a requirement that the state and regional oil discharge prevention and contingency plans be revised annually. CO-CHAIR PEARCE announced that the work draft CSSB 33(FIN) dated 2/16/94 was before the committee. CO-CHAIR FRANK MOVED that the work draft CSSB 33(FIN) be adopted for discussion purposes. Hearing no objection, IT WAS SO ORDERED. Co-chair Pearce invited Annette Kreitzer, aide to Senator Leman, sponsor of SB 33, to come before the committee and explain the changes incorporated in CSSB 33(FIN). ANNETTE KREITZER said that she would make the explanation as clear as possible. Section 1 was part of the five page amendment that was presented to the committee on the February 3rd Senate Finance Meeting. It cleaned up DM&VA statutes removing references to disaster agencies which never had been established and the department felt never would be established. Section 2 and 3 were also included in the amendment dealing with disaster agencies. Ms. Kreitzer stated that page 3, line 11, was the beginning of the original bill. Section 4 was the previous Section 2 (not new material). Section 5 was the previous Section 3, and Section 6 was previous Section 4. Section 7 on page 4 was part of the original amendment that removes disaster agencies and clarified language in reference to political subdivision, municipalities and boroughs. Section 8 and 9 were also part of the amendment. AS 26.23.060(f) (originally between Sections 9 and 10) that dealt with disaster agencies had been repealed. Section 10 was the old Section 5. Section 11 was the old Section 6. Section 12 was the old Section 7. In Section 12 there was a change on page 6, lines 18-20, broadening the language. Anchorage and Fairbanks had expressed their concern that the Governor be able to appoint either a mayor, assembly person, or emergency manager to the SERC, not restricting it to an assembly or city council person. On page 8, line 25, lines 29 and 30, the words "governing body" were deleted from in front of political subdivision. It was felt it would help insure local control for nomination of people for local emergency planning committees. Everything remained the same in CSSB 33(FIN) until page 12. Section 13 removed reference to inter- jurisdictional disaster agencies because there were none. Section 14 was the old Section 8. On page 13, Sections 15 and 16, were also both parts of that original amendment. Section 17 was the old Section 10. Section 18 was the old Section 11. Section 19 was the old Section 12. Section 20 was the old Section 13. Section 21 was the old Section 14. Section 22 was the old Section 15. Section 23 was the old Section 16. Page 17, lines 15 and 16, dealt with the "470" fund. She indicated that work was being done with Senator Miller on SB 215 to ensure that the language aligned between the two bills. She pointed out that the "470 fund" would only be able to be used for SERC activities and staff support when those activities and staff were doing oil and hazardous substance related things. Again, the section number changed as follows: Section 24 was the old Section 17, Section 25 was the old Section 18, Section 26 was the old Section 19, Section 27 was the old Section 20, Section 28 was the old Section 21, and Section 29 was the old Section 22. She said there were two changes in repealers that conformed with the other changes. As aforementioned, AS 26.23.060(f) that dealt with disaster agencies has been repealed between Sections 9 and 10, and 26.23.195, at the request of DM&VA, was repealed. With that, she concluded her explanation of CSSB 33(FIN) work draft. SENATOR KERTTULA asked if a positive response had been made to the Prince William Sound Regional Citizens' Advisory Council (RCAC) and if that organization had had much input regarding this legislation. Ms. Kreitzer said that when the RCAC had testified at the last Senate Finance meeting she felt there was some confusion as to what SB 33 would do. In answer to Senator Kerttula, Ms. Kreitzer said she did not know if the confusion had been cleared up but pointed out that SB 33 did not remove financial responsibility as thought by RCAC. She testified of the support by statewide emergency planning committees and that the State Emergency Response Commission had voted unanimously with the exception of one person in support of SB 33. Discussion followed between Senator Kerttula and Ms. Kreitzer regarding certain individuals and their positions. Co-chair Pearce invited Ervin Paul Martin, Director, Alaska Division of Emergency Services, Department of Military & Veteran Affairs to come before the committee and testify regarding SB 33. ERVIN MARTIN said that his department was in support of SB 33. He pointed out that there had been some question regarding the staffing needed to perform the function of this bill. Other than the three positions that would be transferred to Department of Environmental Conservation to support the Commission, two planners had also been requested. These two planners would help local communities develop and implement their plans. At the end of five years, those two positions would be eliminated. He noted that the Commission has been in effect for four years and a plan had not been approved as yet. Two plans were presented yesterday but he reiterated that it was critical for the Department, if it was to perform a credible service, to have the necessary resources to perform the function. Senator Kerttula requested Mr. Martin to provide him with a written copy of his testimony. Co-chair Frank admitted he was not really well versed in this but from a fiscal position, he understood that a responsibility was being transferred from one agency to another. He felt a little more money should be transferred from DEC rather than using funds from the general fund because it made sense to perform a transfer and not increase the budget. Senator Kerttula concurred with Co-chair Frank's comments. Discussion followed between Co-chairs Frank and Pearce, Senators Kerttula, and Kelly regarding the fiscal notes and the "470" fund. Co-chair Pearce invited Mike Conway, Director, Division of Spill Prevention & Response, Department of Environmental Conservation, to come before the committee. MIKE CONWAY said that funds had gone to the LEPC's for the writing of the plans from the "470" fund. The distinction was that in an all hazards commission the division was picking up additional responsibilities for events other than oil and hazardous substance spills. In other words, the transfer of the "470 fund" went to support oil and hazardous substances which was an eligible use of the fund. When an "all hazards, disaster" plan was sought, it was not eligible for the use of the "470 fund." Senator Kerttula asked what percentage of the costs were "470 fund." Mr. Conway said the three positions being transferred to DM&VA was supported from "470 funds", but the additional two planners would come from general fund moneys. Co-chair Frank said this bill represented a transfer and an expansion of government since now "all hazards" were being addressed. Mr. Conway concurred and used the recent California earthquake as an example of what issues would be dealt with in this legislation, hospitals, roads, water systems, etc., all outside the realm of oil and hazardous substances. Co-chair Frank asked how this dovetailed with existing DM&VA plan and functions. Mr. Martin agreed that DM&VA did have an existing plan funded by state general fund money and federal money for civil defense and natural disasters. What the department was attempting to do was bring together all disaster planning. He commented that if a community did not have a plan, if DEC would release "470 fund" money for a plan, the same functions would have to be applied to the federal criteria. That included accounting for evacuation, sheltering, and damage assessment. Emergency services made no distinction on the type of events. He wanted to make clarify that DEC was not transferring all the staff that had been funded to support the Commission. They would keep at least three positions because they retained the community right to know responsibility of SERA Title 3. Even though DM&VA was picking up the support of the Commission, DM&VA would do it cheaper and provide services directly to the local governments in the creation of these plans. Once these plans were created, in effect, they were applicable to any type of event. At the end of the five years, the two state planner positions would be eliminated, and it would be up to the local governments to maintain them. Senator Kerttula said that he did not know about the National Guard, but did not believe the military would do anything cheaper. In answer to Co-chair Frank, Mr. Martin said that he had five planners already in his budget not including the two requested. Co-chair Frank asked, if the concept was that the local communities would look at local needs and develop a plan, would that eliminate or reduce the need for the state to plan for disaster response in a particular area. He said it seemed like it would save money and that savings could be applied to the support for the local plan. Mr. Martin concurred and went on to say that if a community was physiologically prepared it reduced its vulnerability to the threat of unanticipated events. It can respond because it was aware of hazards that could threaten them which reduced the burden to the state. Prior to the Exxon Valdez, the two most coordinated jurisdictions with a plan in place were the Kenai Peninsula Borough and the Kodiak Island Borough. Under SERA Title 3, the super fund amendment and reauthorization act of 1986, Congress mandated that the states must address hazardous substances and promulgated national response team guidance for hazardous material annexes. When that happened the state adopted the State Emergency Response Commission. DM&VA recommended that the Response Commission should be "all hazards" because of the numerous threats that Alaska faced in our environment. California was following that thinking with their Commission since it was logical and more cost effective. If a community does not have a plan, it was subject to the liability of losses, particularly the loss of life. They were aware of their hazards but did not address them. SERA Title 3 mandated the creation of a plan and under those plans, those functions must be addressed and applicable for all disasters, floods, fires, volcanic eruptions, etc. Co-chair Frank again asked if those existing positions could be utilized to some extent to perform this function without hiring two new people. Mr. Martin agreed that they could, but the time frame to create the plans would have to be extended. He reiterated that the Commission had been in existence for four years and until yesterday, no plans had been submitted. He felt there was an element of frustration in the lack of progress. In answer to Co-chair Frank, Mr. Martin said it was a combination of lack of state support and other factors that caused delays. He felt with material and physical support, the state could help the local organizations develop criteria to meet the minimum established federal standards. By sending people into the field, the department could write, print, and distribute the plan which accelerated the process. Co-chair Frank pointed out that if the state did all those things it was no longer a local plan. Mr. Martin pointed out that the local emergency planning committees were volunteers, were not funded nor provided staff. There was some funding in hazards' analysis and the development of a plan. The department provided the technical assistance. Senator Rieger asked why the Governor did not use an executive order to accomplish this. Mr. Martin said he could not answer that question. Ms. Kreitzer said SB 33 started as a one page bill as a way to give moneys to local emergency planning committees. After the commissioners met, they decided to expand on that. She affirmed that the departments had been very supportive to come to a consensus on this bill. In answer to Senator Kerttula, Ms. Kreitzer said they had been working with the legislative liaisons. Last session that was Chris Lethin and Laurie Nottingham. This session it was Raga Elim and Laurie Nottingham. Co-chair Pearce invited James Studley, Vice Chairman, LEPC Association, Haines, to join the committee at the table. JAMES STUDLEY said that the same questions the committee was asking the department were the same as what the LEPCs had tried to address and tried to get the departments to address over the years. He said he was here to testify in support of SB 33. He said he was speaking for such communities as Anchorage and Fairbanks, but he best represented smaller communities such as Angoon, Kake, Pelican, etc. He was very happy about DES and DEC working out their differences. His biggest concern was what mechanism was going to be used to fund the positions that were going from DEC to DES. Somewhere along the line, Mr. Studley stated that the money was not reaching the LEPCs. Major disaster plans, tremendous requirements from statutes (he listed them) -- so many laws and regulations that the local communities had to deal with that it was overwhelming. To not be financed by the government and try to comply with these regulations was overwhelming. To ask small communities to develop a plan without the needed materials, was a joke. These were all volunteers, they saw a need for emergency planning, they believed in it, they were trying their best to comply with the law but unless there was some kind of pass through wording that gets some funding to the local level, this was going to drag on for years. The mayors in the local communities say it was a state problem and refuse to finance the plans. The local people do want to write their own plans since it was their community. He reiterated the importance of a mechanism to get the funds down to the local level. Co-chair Frank asked for specific items that communities needed but Mr. Studley said they were too numerous to list. Co-chair Frank admitted that local communities would be served with general state support and fewer regulations. Mr. Studley again stated that unless the state funds local efforts to develop the plans, local volunteers were discouraged and finally to meet federal mandates, the state, if it did not fund now, would be forced to hire persons to meet federal mandates. In answer to Co-chair Frank, Mr. Studley said, even though federal moneys were small, at least 75 percent of the funds went straight to the local groups. He suggested the state use a similar percentage mandate. Senator Kerttula MOVED for passage of CSSB 33(FIN) with individual recommendations. No objections being raised, CSSB 33(FIN) was REPORTED OUT of committee with a fiscal note in the amount of $646.7 for the Department of Military & Veteran Affairs, and a fiscal note in the amount of $(646.7) for the Department of Environmental Conservation. Co-chairs Pearce and Frank, Senators Kerttula and Rieger signed a "no recommendation." Senator Kelly signed the committee report with a "do pass" recommendation. HOUSE BILL NO. 372: An Act relating to the four dam pool transfer fund. Co-chair Pearce announced that HB 372 was before the committee. She said that it was the companion bill to SB 243 that was still in committee. She voiced her preference that HB 372 would be reported out of committee while SB 243 would be held. She noted that Randy Welker, Legislative Auditor, Legislative Audit Division, was in the audience and willing to answer questions. Co-chair Frank commented that there had been much discussion on this legislation but few resolutions. He suggested that problems might be resolved in the budget process. Senator Rieger asked if HB 372 would address Senator Sharp's concerns since he was absent from the meeting. Senator Sharp's concerns as understood by Co-chair Pearce had to do with on-going funding for the Division of Energy. She said that HB 372 did not speak to those concerns. In addition, she said that Senator Sharp had informed her staff that he was comfortable with dealing with his concerns in another piece of legislation, the budget process, or in some other way. Senator Rieger voiced his concern with HB 372. He said that it seemed if problems were being addressed that were created in the legislation that was "stuffed down our throats" last year, he would prefer to correct all the problems in one bill. He said that he had not had adequate time to read the legislation last year and now wished he had asked for more time to do that. He again pointed out that there were more problems than just what was being addressed in HB 372 and reiterated that it would be his preference to do it in one piece of legislation. He said that when he looked at the history of appropriations for energy in the state in the early 80s, it had led to nothing but hard feelings from about 1984 on. So, now, when a discussion was held on this subject, everyone was just growling at each other because of "baggage" people carry regarding, who got more than someone else, resentments from having to pay back loans that supplement the grants received, who got more grants, etc. His biggest concern, in general, although there had been this amount of money appropriated for projects which may or may not be excellent projects, the state had put a lot of money into energy, but now the state had transferred the energy program to a place where it was opening up another source of money. He said he did not know how much money had gone into the interties, the hydro projects, the Healy clean coal project...but now there was a fund in AIDEA that was called the Enterprise Development Account which had $460M in it. There were statutory changes made last year that allowed AIDEA to go ahead and either back more power projects with its assets or pledge the state's moral obligation pledge. This opened up another source of funds, the capital reserve fund. This fund was an indirect way in which the Commissioner of Revenue could request additional money from the state to avoid defaults on bonds. He expressed his serious concern over how the transfer had been done last year, where it was at present, and the exposure the state had to AIDEA. He felt AIDEA was run well and was pleased to hear from Riley Snell's testimony that a feasibility study would be done, and done correctly before a project went forward. He felt that HB 372 was a minor clean-up for something that needed a broad based clean-up. He was disappointed that those problems were not being addressed. Recess at 10:00 Reconvene at 10:02 Co-chairs Pearce and Frank concurred with Senator Rieger's concerns. Co-chair Frank went on to say that a few things were left undone and it was a matter of strategy or cooperation with the other body to have that accomplished. He said there were Senator Rieger's concerns, the concern relative to the administrative costs, and another concern on a specific project brought up by Senator Halford. Co-chair Frank said he was not convinced that this was the best way to proceed and he wanted assurance that the other issues would be addressed in a strong way. Co-chair Frank MOVED for passage of HB 372 from committee with individual recommendations. No objections being raised, HB 372 was REPORTED OUT of committee with a zero fiscal note for the Department of Community & Regional Affairs. Co-chairs Pearce and Frank signed a "no recommendation." Senators Rieger and Kerttula signed the committee report with a "do not pass" recommendation. SENATE BILL NO. 243: An Act relating to the four dam pool transfer fund. SB 243 was scheduled but not heard. It was HELD in committee. ADJOURNMENT The meeting was adjourned at approximately 10:15 a.m