Legislature(2013 - 2014)HOUSE FINANCE 519
01/31/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB30 | |
| HB65 || HB66 | |
| Department Overview: Department of Labor and Workforce Development | |
| Department Overview: Department of Law | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 65 | TELECONFERENCED | |
| += | HB 66 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 30
"An Act relating to performance reviews, audits, and
termination of executive and legislative branch
agencies, the University of Alaska, and the Alaska
Court System; and providing for an effective date."
1:31:39 PM
REPRESENTATIVE MIKE CHENAULT, introduced HB 30. He declared
that HB 30 was an investment in Alaska's future. He stated
that the performance audits had been in statute since 1977,
but the statute did not allow the program to continue. He
stated that a bill was introduced in 2009 that would have
reinstated the program. That bill passed the House, but did
not get taken up in the Senate. If that bill had passed,
the first department on the list of audits was the
Department of Corrections (DOC). He felt that performance
audits were necessary, in order to accurately review and
approve a budget. He felt that HB 30 would provide
effective changes to the budgeting process. He stressed
that the job of legislators was to ensure that funding was
accurate for the right service or project. He added that it
was not the legislature's job to micro manage the
departments. He declared that HB 30 would cause a review of
current department administrations; and compare those to
the best practices from other states and experts in order
to effectively and efficiently meet constitutional
mandates. He remarked that revenue projections had changed
significantly; oil production had dropped; and the state
was at the mercy of oil price changes. The State loses an
equivalent to $1 billion, when the price of oil drops by
$10 a barrel. He stressed that HB 30 would start the
process that would significantly enhance the ability to
handle the responsibility of the finances of Alaska.
Co-Chair Stoltze pointed out that HB 30 would be referred
to a subcommittee, before it would be considered for
passage from the House Finance Committee (HFIN).
1:36:48 PM
SHARON KELLY, STAFF, REPRESENTATIVE CHENAULT, explained HB
30. She referred to the Sponsor Statement (copy on file).
In 1977 the Alaska State Legislature found there was a
need for an effective and regular system of
scrutinizing the programs and activities of all State
agencies, boards and commissions. The legislature
further found that the establishment of a system for
periodic review by the public, the executive and
legislative branches of certain state agencies, boards
and commissions would help the governor and the
legislature determine the need for the continued
existence of each. Under AS 44.66, this review has
continued since 1977 for boards and commissions. The
dates to review programs and agencies of the state
ended in 1983 and were never reenacted.
Low oil revenues contained budget growth from the
early Eighties to 2004. State revenues grew
dramatically when the price of oil rose in 2004, and
the budget grew accordingly. The current legislative
budget process mainly looks at increments and without
a regular system of scrutiny, annual budgets continue
to grow. Other states have incorporated performance
reviews that have resulted in significant budgetary
savings.
This legislation will renew the effective and regular
system of scrutiny of our departments by authorizing
performance reviews. The legislation has been crafted
to model some of the aspects of the Texas Sunset
Commission reviews, but utilizes minimal staff and
outsourced independent contract work to complete the
process under the auspices of the Legislative Audit
Division.
The information provided by these reviews will include
authority, accountability, effectiveness, efficiency
and necessity of departments and their programs. The
report, along with draft legislation to fix issues,
will provide the House and Senate Finance Committees
with in-depth information needed to fund state budgets
appropriately.
Alaskans will be the ultimate beneficiary of these
reviews. This process will ensure that our
governmental agencies are working for Alaskans in an
efficient manner.
1:38:23 PM
Ms. Kelly explained the difference HB 30, and the bill that
was introduced to the legislature two years prior: HB 166.
She stated that two changes were proposed by the
legislative auditor, and one was a technical date change.
The first change in Section 1 stated that the savings
calculations that resulted from implemented audit
recommendations would be completed by the Legislative
Finance Division (LFD). The second change was in Section 6,
page 6, line 30, which changed the word, "will" to "may" of
items that would appear in the final report. That change
would give LFD the flexibility to adopt the report elements
for each department, as determined necessary and/or
appropriate. She restated that the last change was to move
the dates two dates forward. The order of department
reviews was agreed upon in the subcommittee work of HFIN
two years prior.
Vice-Chair Neuman wondered Legislative Budget and Audit
(LB&A) had the authority to review the audits for budget
analysis. Ms. Kelly replied that HB 30 provided the
opportunity for LB&A to review the department increments,
so the subcommittees can analyze the information.
Vice-Chair Neuman assumed that LB&A already had the
authority to effectuate performance audits within the
departments. Ms. Kelly replied that LB&A had the authority
to have an audit request presented to them. In 1977, a
periodic review was set in statute. The statute did not
continue, because the statute did not carry forward. Unless
the performance audits were written in statute, some
departments' audits may be overlooked.
Vice-Chair Neuman felt that performance audits were
necessary, but he expressed concern regarding the authority
power of LB&A.
Co-Chair Stoltze declared that he would not have signed on
as a cosigner of the bill, if it were a constitutional
amendment to amend the legislature's appropriation powers.
He felt that HB 30 would enable another agency to carry out
the audits.
1:43:23 PM
Representative Chenault agreed, and reiterated Co-Chair
Stoltze's comments.
Representative Edgmon looked at page 4 of HB 30, and
wondered if there was any consideration towards advancing
the auditing schedule. Ms. Kelly responded that it was
possible to advance the auditing schedule. She shared that
the departments with the largest budgets were the
Department of Health and Social Services (DHSS), the
University of Alaska (UA), the Department of Education and
Early Development (DEED), and the Department of
Transportation and Public Facilities (DOT). She stated that
the first on the list was Department of Natural Resources
(DNR), because it had a medium sized budget. The reason for
this decision was to ensure some experience, before
auditing the larger departments.
Representative Munoz noted that the fiscal note indicated
three full time staff by FY 15; and $1 million in
contractual fees. She wondered why there was an additional
$1 million in contractual fees. Ms. Kelly replied that LB&A
prepared the fiscal note, with the intent to have some
performance auditors on staff. She furthered that the bill
gave the ability to use experts in the field to get the
experience of the best practices.
1:48:58 PM
Co-Chair Austerman looked at page 6 of the bill, and
queried the changes from the previous year's similar bill.
Ms. Kelly replied that page 6, line 36 stated that "in the
report, the review team may"; in the prior bill that phrase
said that "in the report, the review team will." She
explained that the change was made at the request of LB&A,
so the final report could only highlight the large and
important legislative items.
Co-Chair Austerman mirrored Representative Edgmon's
concerns related to the auditing schedule.
Representative Costello wondered what the funds for out of
state travel would specifically be used toward. Ms. Kelly
replied that the legislative auditor added the out of state
travel funding to the fiscal note in case there was a need
to examine another state's system.
Representative Gara expressed support of HB 30. He surmised
that the bill would not affect the governor's budget. Ms.
Kelly agreed.
Representative Gara looked at page 5, lines 7 through 14 of
the bill. He wondered what programs would be examined, if
there was not a possible 10 percent cut under the bill's
standards. Ms. Kelly replied that it was a guideline, in
order to provide a possible list that would cut the
department by 10 percent, and then the legislature would
determine where the cuts could be made.
1:53:48 PM
Representative Gara wondered what would happen if the
agency could not find 10 percent worth of cuts. Ms. Kelly
pointed out that all information submitted to the
legislature would state that the financial plans would be
prioritized. She remarked that the manager prioritizes the
program, but could argue that the items that were low on
the list were still constitutionally mandated.
Representative Gara wondered if a provision could be added
that would require the department to explain why it could
not find 10 percent of the programs unnecessary.
Representative Chenault replied that the criteria was
merely a guideline, so the department would be urged to
prioritize there programs.
1:58:00 PM
Representative Gara reiterated his desire for a provision
that allows the department the ability to explain their
reasoning for not making specific cuts to programs. Ms.
Kelly responded that the intent of the bill was to ask
departments to objectively examine their budgets, and
identify 10 percent. She understood that there were larger
items that could not be cut, but there was nothing that
mandated a requirement of the legislature to decrease those
programs.
Co-Chair Stoltze stressed that there should always be a
benchmark for the departments' budgets.
Representative Kawasaki wondered where and how the
performance metrics would evolve. Ms. Kelly replied that
the metrics would evolve in the process of the legislative
auditor looking at the way that other states' metrics
evolve. She pointed out that there were various metrics
that states utilize, and the legislative auditor would
determine if those metrics applied to Alaska.
Representative Kawasaki wondered what would happen if the
governor's metric was in conflict with the legislature.
Representative Chenault responded that it was the privy of
the legislature to construct a bill, and furthered that he
would like to work with DOA to come to an agreement based
on continuity.
2:03:38 PM
Co-Chair Stoltze remarked that the governor could not "veto
money into the budget." He pointed out that the
legislature's primary role was appropriation, and it should
be a collaborative effort.
Vice-Chair Neuman looked at page 4, line 5 of the bill, and
suggested the words "have to" instead of the words "may"
and "shall." He looked at the fiscal note, and wondered if
the department would be restricted to the personnel that
were already in place, while the performance audit was
conducted. Ms. Kelly responded that OMB agreed that there
may be added work, but they agreed to move forward with a
zero fiscal note. She remarked that the fiscal note may
evolve.
Co-Chair Stoltze suggested language about direction related
to managing the performance audits.
Representative Chenault thanked the committee, and looked
forward to developing a proper way to conduct the
performance audits.
Co-Chair Stedman appointed Representative Costello to be
the subcommittee Chair for the Performance Audits
subcommittee; with members: Representative Austerman,
Representative Wilson, and Representative Gara.
HB 30 was HEARD and HELD in committee for further
consideration.
2:08:35 PM
AT EASE
2:09:21 PM
RECONVENED
Co-Chair Stoltze handed the gavel to Co-Chair Austerman.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LAW HFIN OVERVIEW(013113).pdf |
HFIN 1/31/2013 1:30:00 PM |
LAW Overview |
| DOLWD HFIN Overview 1-31-13 (2).pdf |
HFIN 1/31/2013 1:30:00 PM |
DOLWD Overview 1/31 |