Legislature(2015 - 2016)HOUSE FINANCE 519
02/05/2015 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB72 || HB73 | |
| Fy 16 Budget Overview: Department of Commerce, Community and Economic Development | |
| Fy 15 Governor's Supplemental Budget Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 72 | TELECONFERENCED | |
| += | HB 73 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE BILL NO. 72
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, making
reappropriations, and making appropriations under art.
IX, sec. 17(c), Constitution of the State of Alaska,
from the constitutional budget reserve fund; and
providing for an effective date."
HOUSE BILL NO. 73
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:33:38 PM
^FY 16 BUDGET OVERVIEW: DEPARTMENT OF COMMERCE, COMMUNITY
AND ECONOMIC DEVELOPMENT
1:33:52 PM
FRED PARADY, ACTING COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT (DCCED), introduced
department staff. He provided a PowerPoint presentation
titled "Department of Commerce, Community and Economic
Development Department Overview," dated February 5, 2015
(copy on file). He discussed the department organization on
slide 2. The department's six corporate entities included
the Alaska Energy Authority (AEA), the Alaska Industrial
Development and Export Authority (AIDEA), the Alaska
Gasline Development Corporation (AGDC), the Alaska Seafood
Marketing Institute (ASMI), the Alcoholic Beverage Control
Board, and the Regulatory Commission of Alaska (RCA). The
department's six core divisions included Administrative
Services; Banking and Securities; Insurance; Community and
Regional Affairs; Economic Development; and Corporations,
Business and Professional Licensing. He noted that the
department's mission was to promote strong communities, a
healthy economy, and to protect consumers in Alaska. He
described the department as a conglomerate, which had a set
of functions centering on its mission statement.
Acting Commissioner Parady turned to a pie chart on slide 3
showing the department's funding distribution by agency and
division in the governor's FY 16 amended budget. The chart
illustrated that the six corporations accounted for $123
million of the budget and the six core divisions accounted
for $83.5 million. He remarked that of the department's
$207 million budget, $41 million resided in Power Cost
Equalization (PCE) funds. He briefly highlighted a pie
chart on slide 4 showing the DCCED budget by core services;
40 percent of the chart was allocated to sustainable
energy, 28 percent went to economic growth, 18 percent went
to consumer protection, and 14 percent went to strong
communities. He addressed economic growth, which included
the Division of Economic Development, AIDEA, and ASMI
(slide 5).
1:36:45 PM
Acting Commissioner Parady continued to speak to economic
growth, specifically in regards to the Division of Economic
Development (slide 6). The division processed 261 loans for
$29.1 million across 10 loan programs, the majority
included 237 in the Commercial Fishing Revolving Loan Fund.
He discussed that funds supporting tourism marketing
resided within the division; the prior year the legislature
had created the Alaska Tourism Marketing Board, which acted
as an advisory board to the division. He added that the
contracts for tourism marketing roughly totaled $15 million
and resided in the division. Tourism marketing generated
800,000 information requests, 220,000 trips, and 700,000
visitors. He noted that the data was based on follow up
surveys. Additionally, the Division of Economic Development
conducted partnerships with industry and the University of
Alaska (UA) to support resource development efforts to
develop new industry. As an example he referenced a January
1, 2015 report on unmanned aircraft systems and economic
development strategy for Alaska, which had been developed
in conjunction with UA-Fairbanks. The concept was to take
advantage of Alaska's airspace in the context of research
on commercial applications of unmanned aerial vehicles.
Another example included a report from the prior fall by
the Alaska Maritime Industrial Support Sector; the report
assessed the age of the fishing fleet and how to rebuild
the fleet in Alaska-based shipyards. He noted that the
division was also responsible for generating the
mining/minerals report.
1:38:16 PM
Co-Chair Neuman recognized that Representative Edgmon
joined the committee.
Co-Chair Neuman had spoken with members of the tourist
industry and had suggested including links to the state
parks website on Alaska tourism advertisements. He stressed
that state parks were a significant part of the state's
attraction. He asked the department to help develop the
idea.
Acting Commissioner Parady appreciated the suggestion and
would follow up on it.
Co-Chair Neuman referred to the brand "Made in Alaska." He
thought there should be shirts, hats, and other items for
the Alaska state parks. He thought there should be further
marketing for the state. He believed ASMI should do the
same.
1:40:42 PM
Acting Commissioner Parady made note of the suggestion. He
remarked that the prior fall a Made in Alaska home had been
constructed in Anchorage; the predominant materials had
been manufactured in Alaska, including the wood floors,
cabinets, windows, etcetera. He turned to slide 7 and
discussed AIDEA on slide 7:
· $17.6 million FY2016 dividend approved
· Nearly $700 million in private sector investment
leveraged (projected)
· Projects and investments will create or retain nearly
1,500 construction jobs and over 1,000 permanent jobs
(projected)
Co-Chair Neuman noted that Representative Pruitt had joined
the meeting.
Acting Commissioner Parady spoke to ASMI on slide 8. He
communicated that ASMI was the "heartbeat" of Alaska's
primary employment industry; the fishing industry generated
63,000 jobs. He noted that the fisheries export value had
been increased to almost 85 percent to $3.2 billion in the
past ten years. He addressed the Responsible Fisheries
Management Initiative and explained that Alaska's seafood
had been "held hostage" to a third-party entity (the
Maritime Stewardship Council) that was certifying the
sustainability of the state's fisheries. Consequently, when
the entity had certified that Russian Pollock was
sustainable, the value of the Alaska Pollock catch dropped
by 25 percent. He reasoned that no one was more capable of
certifying the sustainability of Alaska's fisheries than
Alaska. He relayed that the Responsible Fisheries
Management designation (generated by ASMI) was recognized
in the market. He explained that the sustainability
designation was necessary to enter certain large
procurement chains (e.g. Walmart and others).
Co-Chair Neuman asked if ASMI verified that fish coming
from Alaska were caught in sustainable fishery
environments. Acting Commissioner Parady replied in the
affirmative.
Co-Chair Thompson asked if other entity continued to
increase the fees it charged to certify Alaska's fisheries
as sustainable. He asked if the entity had classified
Alaska's fisheries as unsustainable because Alaska had not
paid the fee. Acting Commissioner Parady replied that the
entity had withdrawn its certification, which had resulted
in the state losing market share. However, the department
had created an alternative; the brand of wild caught Alaska
fish was immensely valuable to the state.
Co-Chair Neuman spoke to his concern that the Yukon
Kuskokwim region had to stop subsistence fisheries due to
problems. He noted that 8 out of 12 stock of concerns came
from the Susitna River Valley. He wondered how the issue
impacted the sustainable fishery certification. Acting
Commissioner Parady would speak to ASMI and would follow up
with an answer.
1:45:26 PM
Representative Gara asked how many visitors the state had
in the year referenced on slide 6. Acting Commissioner
Parady replied that he did not know the specific figure. He
added that the information shown on slide 6 reflected
additional tourism generated from the state's marketing
effort based on a series of follow-up surveys.
Acting Commissioner Parady returned to slide 8 and noted
that the voluntary fish tax was established at 0.5 percent
of ex-vessel value, which generated roughly $12 million. He
moved to slide 10 related to affordable energy. He
communicated that AEA had dispersed nearly $40 million in
PCE grant payments to $188 communities in FY 14. He
discussed that PCE subsidized the first 500 kilowatt hours
of energy into a home. He elaborated that the RCA was
responsible for certifying the utilities as meeting
required criteria and being eligible for a subsidy. He read
from slide 10:
· 53 of 114 rural power system upgrades completed
· 22 projects funded through the Emerging Energy
Technology Fund program
· Annual fuel savings from the Renewable Energy Fund
projected to be 20 million gallons of diesel
equivalent in 2016
Co-Chair Neuman noted the absence of a list of the 22
projects funded through the Emerging Energy Technology Fund
that had been completed and how much it could cost to
complete the remaining projects. He stressed that the slide
did not contain any financial information. Acting
Commissioner Parady replied that he would provide a
spreadsheet with the detailed information.
Representative Edgmon noted that the Emerging Energy
Technology Fund had not been funded the prior year;
therefore, he reasoned that the 22 projects went back at
least two years. He relayed that he sat on the advisory
committee for the Renewable Energy Grant Fund and explained
that the fund had done some great things, but with a
decreasing amount of funding; prior funding had been $22
million, and the funding recommendation for the current
year was $15 million.
Representative Gattis requested a list of projects that
were not on the list of 22 projects that were needed. She
wondered which projects had been funded that had not been
successful. She used an emergency generator situation in
Tuluksak, Alaska as an example.
1:49:22 PM
Acting Commissioner Parady would follow up. He spoke to the
AGDC on slide 11. He relayed that AGDC continued on work to
synchronize the timing of the AKLNG [Alaska Liquid Natural
Gas] and ASAP (Alaska Stand Alone Pipeline) projects. He
noted that the state had completed the ASAP Class 3 cost
estimate (+/- 20 percent), which had produced new burner
tip estimates of $11.50 to $14.00 for Fairbanks and $11.50
to $14.50 for Anchorage. He communicated that the
synchronization of the two projects was ongoing.
Co-Chair Neuman noted that the agencies would present to
the committee in the future regarding their individual
budgets.
Acting Commissioner Parady turned to slides 12 and 13
pertaining to strong communities and the role of the
Division of Community and Regional Affairs. He shared that
state statute (Article 10 Section 14) required the
existence of a state agency to support the development of
capacity in local government. He detailed that the division
had 40 local government specialists and grants personnel
located in six regional offices; the division visited 150
to 170 communities annually and provided rural utility
business advisor services, bulk fuel loans, local boundary
commission, municipal land trust, Quick Books training, and
other for rural communities. He shared that the local
boundary commission approved the incorporation of Edna Bay,
creating Alaska's first new city in ten years. He noted the
supplemental request of $75,000 for Edna Bay's
organization, which was statutorily required ($50,000 in
year one, and $25,000 in year two). The division had
distributed $85 million to 307 communities through revenue
sharing and other programs (i.e. payment in lieu of taxes
(PILT), national forest receipts, shared fisheries,
business tax, and fisheries resource landing tax). The
division was working to cross-train its staff to deliver
secondary information and assistance to local governments.
For example, the trained staff could assist communities
with arrearages in their Public Employees' Retirement
System (PERS) accounts by connecting them with the
appropriate person.
Co-Chair Neuman discussed that revenue sharing had not been
funded in the governor's proposed budget. He believed there
was a good possibility that revenue sharing would be
eliminated altogether given the deficits facing the state.
He wondered how the state would pay for assistance provided
to communities for essential services. He remarked on the
$87 million distributed to 307 communities that may not be
receiving any money in the future. He wondered how the
department would help communities prepare for the loss in
funds.
Acting Commissioner Parady replied that it would depend
partially on the actions of the legislature as to what
options would be available. He recognized that all of the
budget decisions the legislature was considering were tight
and interconnected. He reasoned that the community revenue
sharing funds were distributed based on the balance on June
30. He detailed that the draw had been $57 million the past
year; if the amount could be replenished, the draw would
continue at the same rate; however, if it was reduced it
would lead to reduced community revenue sharing funds. He
recently learned that the community revenue sharing funds
were distributed to each community and then on a per capita
basis, which meant the impact of the reduced funding level
would be felt in the more populated areas first.
Co-Chair Neuman remarked that the governor's proposed
budget did not include revenue sharing funds. He wondered
if the department would assist communities in dealing with
the loss of funds.
1:56:23 PM
Acting Commissioner Parady replied that he would follow up
on the question.
Co-Chair Thompson remarked that without any funding there
would be $54 million to distribute in the current year,
around $30 million the following year, $17 million the year
after, and would then go down to zero. He referred to a
list showing that revenue sharing accounted for as much as
94 percent of the budget in some small communities. He
believed that without the funding many communities would
have to close their doors. He remarked that there were no
bankruptcy laws for a community; there was nothing in
statute showing what would happen to the assets or
outlining who would take care of them. He added that some
of the communities had bond payments the state would have
to take over. He stressed that there were many consequences
that would result from an absence of revenue sharing funds,
which required consideration.
Acting Commissioner Parady responded that he had studied
the spreadsheet on the percentage of each community's
budget was funded by revenue sharing. He agreed that some
communities depended on revenue sharing for over 90 percent
of their budget. He had not recognized the bankruptcy
complications and believed the issue needed further study.
Representative Edgmon relayed that for his district,
revenue sharing fell into the core services category. He
clarified that revenue sharing was funded at $57 million in
the governor's current budget, even though no money was
being added to the fund itself. He noted that the prior
year it had been funded at $52 million.
Representative Wilson believed there had been a point in
time when revenue sharing had not existed. She wondered how
communities had become reliant on the funds. She asked if
there had been federal funds communities had received in
the past that were no longer available, which had increased
reliance on revenue sharing.
Acting Commissioner Parady replied that Edna Bay was the
first new community incorporated within the past ten years
and revenue sharing had returned within that period. He did
not believe there had been communities forming for revenue
sharing in the past decade.
Co-Chair Neuman also questioned whether the Local Boundary
Commission had planned on having revenue sharing as part of
its governmental organization funds.
Representative Gara noted that revenue sharing would be a
conundrum for all legislators. He agreed with Co-Chair
Thompson that the issue was especially important for small
communities. He thought it would be useful for the
department to provide a history of revenue sharing to the
committee. He stated that it had been over $100 million at
one point in time. He surmised that communities that could
afford it the most would have to take some of the hits. He
believed a significant discussion was necessary on the
issue.
Co-Chair Neuman referred to a recent meeting he had with
the commissioner about communities and the budget. He
remarked on DCCED's mission statement, which included
strong communities. He discussed an example of a community
where the school was the nucleus that provided a place for
exercise and all types of community gatherings. He wondered
if the department was working on a plan to deal with the
situation given the budget deficit. He stated that the
legislators were citizen-based and depended on the
department's recommendations to the committee. He had not
heard a plan as of yet.
Acting Commissioner Parady shared that in the past he had
worked as the chief operating officer for a school
district. He agreed that schools were a hub for wedding
receptions, funerals, sporting events, Head Start, meals,
and other. He remarked that one of the conundrums that
would face legislators was related to school financing and
the loss of federal receipts for communities. He believed
the question was well placed and needed answering by the
department. He relayed that the department would follow up
on the question.
Co-Chair Neuman relayed that there was a limited amount of
funding to distribute between all departments, which made
receiving the information important.
2:02:45 PM
Acting Commissioner Parady returned to slide 13 and relayed
that the Division of Community and Regional Affairs had
1,929 capital grants open with a total of $2 billion in
awards. He detailed that the named-entity legislative
grants resided in the division and were administered
efficiently and effectively. He added that the grants were
administered with a passion for helping people solve
problems. He noted that the grants had a five-year lifetime
and he expected the numbers to be shrinking. He concluded
that the current grants were still in the pipeline to do
good work.
Representative Guttenberg addressed broadband access. He
spoke to the broadband task-force DCCED had formulated,
that had come out with a $1 billion price tag. He stated
that salmon fishing, marketing, school districts, AEA,
remote energy projects, and everything the state touched on
was helped or hindered by broadband. He believed broadband
was in an abysmal state in Alaska. He noted that his
broadband capability was marginal at best in his home
outside of Fairbanks. He stated that broadband needed to be
strengthened to build a strong state and community. He
remarked that much of what was needed was currently in
place due to the telecommunication industry, but much of it
needed a link to make the chain longer. He urged the
department to work on a plan. He stated that it was
pointless to provide students with technology if they did
not have the ability to access the internet. He emphasized
the importance of more reliable and faster internet. He
understood that it may not be possible to implement a
strategy at present, but he believed it was needed for the
future.
Acting Commissioner Parady linked back to Representative
Gattis's comments on the Tuluksak generator. He stated that
in a more ideal broadband world it would be possible to
remotely monitor various power systems. He shared that in
Nuiqsut, Alaska there had been a project to distribute gas
in the community, which had a remote capacity. He continued
that Alaska was working to achieve 10 megabits per second
(mbps) when the rest of the country had speeds of 100 mbps.
He agreed that Alaska was woefully behind related to
broadband speed. He would continue to address the issue.
2:06:43 PM
Acting Commissioner Parady discussed consumer protection on
slide 14. He detailed that consumer protection activities
were regulations that were applied to protect the consumers
of Alaska. He spoke to the Alcohol Beverage Control (ABC)
Board on slide 15; its mission was to protect the public
from alcoholic beverage abuse by enforcing state laws
regulating alcoholic beverage commerce. There were nearly
1,900 active liquor licenses in 2014. He believed that
since the board's transition to DCCED, the agency was doing
a good job straddling the divide between public health
substance abuse concerns and the responsible industry
concerns. He spoke highly of the board's current director
Cynthia Franklin. He addressed a two-year effort to rewrite
Title 4 (with 60 or 70 stakeholders); the rewrite would be
before the committee later in the day. He relayed that the
timing would provide a useful foundation and transition
into the upcoming marijuana regulations.
Vice-Chair Saddler asked if there was any diminution of the
effectiveness of the ABC Board as a public safety function
since its transfer from the Department of Public Safety.
Acting Commissioner Parady replied in the negative. He
believed the transition had gone well. He remarked that
there had been some "sweat equity" amongst people with
differing views throughout the process, but he believed the
result had been strengthening.
Vice-Chair Saddler asked if there was a stronger function
in collaboration with the industry (i.e. increased support
for the industry's business operations). Acting
Commissioner Parady replied that there were some
compromises represented in the Title 4 legislation. One
compromise was related to the consumption of alcohol by
minors; the penalty was lessened, but it was more
universally enforceable. He explained that the penalty
under current statute was difficult for officers to
implement; therefore, there was not always follow through.
He furthered that by decreasing the offense and making it
easier to implement, the accuracy of the record of minors
and adults providing minors with alcohol would increase. He
noted the department's excitement at bringing the Title 4
rewrite before the committee.
Vice-Chair Saddler remarked that there had been some
concern about the transfer of the ABC Board to DCCED;
therefore, he was glad to hear things were going well from
a public safety standpoint.
Representative Gara recalled a presentation by several
pipeline companies. He remarked that one company's
representative had told the committee that the state would
be rich if their company was chosen. He stated there had
been a similar tenor in some of the marijuana debate; if
the marijuana initiative became law, the state would be
able to levy taxes on the substance. He asked if the
administration anticipated presenting marijuana tax
legislation in the current year.
Acting Commissioner Parady replied in the negative. He
detailed that the department was in a nine-month regulatory
writing process. He furthered that the bill draft to
develop the marijuana control board had opened that day. He
detailed that conceptually the department was working to
house an alcohol and a marijuana board under the ABC Board
agency. The department was also considering reassigning its
experienced alcohol examiners to marijuana and hiring new
alcohol examiners, given that the alcohol functions were
well established. He communicated that the department was
beginning to think its way through the regulatory and
operating process. He could not speak to the tax component,
which was under the purview of the Department of Revenue.
2:11:40 PM
Representative Gara asked if commercial sales of marijuana
would begin with no tax implemented. Acting Commissioner
Parady replied in the negative. He stated that work was in
progress.
Co-Chair Neuman asked for the amount of the supplemental
PSUM request (slide 15). Acting Commissioner Parady replied
that the request was for $785,000. Co-Chair Neuman asked
for the meaning of PSUM. Acting Commissioner Parady replied
that the acronym stood for the production, sale, and use of
marijuana. He wondered what would happen if the
supplemental was not approved. Acting Commissioner Parady
replied that a denial of the funds would essentially be an
unallocated cut to the department. The department would
have to perform the functions; therefore, he would cross
that bridge when he came to it down the road if the funds
were not approved.
Co-Chair Neuman replied that the administration could
introduce legislation that would go through the committee
and public process to determine the need, how it would be
implemented, and who would be on the board.
Acting Commissioner Parady was aware of a bill draft
regarding a [marijuana] board. He added that the issue was
governed by the [voter] initiative. He stated that there
were issues in the area that he had never dreamed of. He
turned to slide 16 pertaining to the RCA. He communicated
that the RCA had significantly improved processes and
minimized costs to ratepayers and companies by enabling e-
filing. He noted that e-filing was currently being extended
to small rural telephone companies. He relayed that the RCA
collaborated with the Regulatory Assistance Project to
lower costs and to certify utilities for compliance for the
PCE Fund, which led to distributions. He discussed the
Division of Banking and Securities on slide 17:
· Contributed $13.2 million of licensing fee and fine
receipts to the general fund
· Facilitated $95.0 in restitution payments to Alaskans
· License, register, charter and examine:
o Investments and Securities firms, registrations
and filings
o ANCSA proxy filings and inquiries
o Mortgage broker/lenders
o Money service businesses (e.g., money
transmitters, currency exchangers)
o State depository and nondepository institutions
· Sponsored the Anchorage Fraud Summit in September 2013
Vice-Chair Saddler referred back to slide 16 and asked for
information about the Regulatory Assistance Project. Acting
Commissioner Parady replied that the project was a national
effort.
Vice-Chair Saddler asked if the project came at no cost to
the state or had associated federal funding. Acting
Commissioner Parady replied that the project was federally
funded. He offered to provide additional detail.
Vice-Chair Saddler asked how well the RCA was doing. He
referred to work on the pipeline reauthorization. He
wondered if the agency was working efficiently and if it
had any needs. Acting Commissioner Parady replied RCA was
stable. The agency had a range of rate filings and other
cases before it, but the chairman had not indicated any
deficit.
2:15:51 PM
Acting Commissioner Parady discussed the Division of
Corporations, Business and Professional Licensing (CBPL) on
slide 18. He detailed that there were 68,000 business
licenses, 67,000 professional licenses, slightly over 6,500
corporation licenses, and 43 licensing programs. He noted
that the agency generated fees. He relayed that the number
of professional licenses were up 5 percent since 2013, its
open-to-close case time had decreased by half, and it had
worked hard to control internal costs to reduce legal
expenses by 34 percent. The issues had been before the
Legislative Budget and Audit Committee; by controlling the
indirect costs there was a strong effort to control the
rate of increase in professional licenses, which
represented a success for the division.
Representative Wilson asked if all of the state's boards
were under CBPL. Acting Commissioner Parady replied in the
negative. For example, teachers were not included.
Representative Wilson thought there were a couple hundred
boards. Acting Commissioner Parady replied that there were
43 boards, 3 of which were new including massage
therapists, behavior analysts, and contractors.
Representative Wilson asked if the 43 boards were all self-
sufficient. Acting Commissioner Parady replied in the
negative; however, substantial progress had been made. He
added that the department was awaiting further scrutiny of
the issues by Representative Pruitt and the legislative
budget subcommittee for the department.
Vice-Chair Saddler communicated that there were regulatory
and professional licensing boards and approximately 170
advisory boards.
Representative Wilson asked if the other advisory boards
fell under a specific agency. Acting Commissioner Parady
replied that the boards were housed across state
government. He noted that the 43 professional licenses were
housed in CBPL.
2:19:05 PM
Acting Commissioner Parady turned to the Division of
Insurance on slide 19:
· Over $3.4 billion in total premium written in CY2013
· Collected $64 million in taxes and fees in FY2014
· Issued 47,376 licenses, an increase of almost 8
percent over FY2013
· Opened and closed 245 of 300 complaints, a closure
rate of 85 percent
· $216.0 returned to consumers in FY2014
· Opened 79 and closed 115 investigations
· Conducted first joint investigation with the Division
of Banking and Securities
Acting Commissioner Parady elaborated that the department
was working diligently to synergize investigative resources
across its divisions. He spoke to challenges for the
department on slide 20:
· High cost of energy impacts residents, businesses and
economic development efforts
· Gaps in critical infrastructure including roads,
ports, communications, processing facilities
· Uncertainty hampering private investment
· Maintain awareness in national and international
markets about Alaska products and services
· Geographic scale impacts logistics and transportation
costs
· New program responsibilities (PSUM)
Acting Commissioner Parady provided a lookback of the
department's budget on slide 21. The FY 16 governor's
amended budget was slightly below $207 million, which
represented a decrease of approximately $7.5 million. There
was a decrease in unrestricted general fund from $40.5
million to $35.5 million, which represented an 8 percent
decrease. He provided a lookback of the DCCED share of
total agency operations from 2007 to present (general fund
only) on slide 22. The department accounted for between
2.16 and 3.06 percent of total agency operations; it
accounted for 2.37 percent in the current year. He moved to
another lookback on slide 23 showing DCCED appropriations
(general fund only) by division. He pointed to a spike in
the purple line representing AEA in 2009 where PCE had been
fully funded with an additional $23 million. A spike in the
blue line representing ASMI indicated the reclassification
of its funds from general fund.
CATHERINE REARDON, DIRECTOR, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, clarified that the ASMI
funds were reclassified from general fund to statutory
designated program receipts.
Acting Commissioner Parady addressed a historical chart
slide 24 representing DCCED appropriations (all funds). He
noted that similar spikes in appropriations occurred for
similar reasons. He discussed economic growth on slide 25.
The department's target was to create or retain 500 jobs
annually. He expressed dissatisfaction with the chart
because the target did not move; he did not believe it was
aggressive enough. He noted that the chart represented an
artifact of past choices, which he believed the department
needed to revisit.
2:22:58 PM
Acting Commissioner Parady addressed slide 26 related to
the department's ability to support municipal governments
in their ability to provide essential public services. The
percentage of local governments providing essential public
services had moved up towards 100 percent, which remained
the department's target. The chart data included basic life
services such as clean drinking water, power plants, and
other.
Vice-Chair Saddler pointed to slide 25 related to retaining
jobs. He wondered how to measure how well the department
was retaining existing jobs. He believed it would allow the
department to claim credit for the vast majority of the
jobs that would remain. Acting Commissioner Parady agreed
and believed the chart was ill founded. He relayed that the
chart data stemmed largely from AIDEA and was correlated to
the agency's loan programs, which a subset of a more
specific target.
Representative Gara saw a gap in some of the numbers on
slide 6. He looked at the bullet indicating that tourism
marketing had generated 700,000 visitors. He stated that a
person doing an internet search about travel to Alaska
could end up on a car rental, fishing guide, hotel, or
private website. He reasoned that just because a person
visited the state's travel website did not mean the website
was responsible for the person's decision to visit the
state. He wondered if the department could convince the
committee that the 700,000 visitors would not come to
Alaska if they did not visit the state's website.
Acting Commissioner Parady answered that the data was not
website generated. He explained the department sent follow
up surveys of the 800,000 individuals who requested
information. The survey looked at how many of the
individuals came to the state and how many trips they took.
He believed the information was germane directly to the
information requests. He agreed that people may take a
multi-pronged approach, which could also include internet
searches. He offered to follow up with additional detail.
Co-Chair Thompson noted that the state was putting $15
million to $16 million into tourism marketing. He remarked
that the tourism industry claimed that one of the cruise
lines was spending $50 million to bring people to Alaska.
He wondered if there was anything showing other advertising
that brought people to Alaska and how much those industries
spent on top of what the state spent. Acting Commissioner
Parady replied that he would follow up on the question.
Representative Munoz asked for detail on proposed cuts to
the department. Acting Commissioner Parady replied that the
department's budget had just been published. The department
had worked to reduce vacant positions and to reduce program
funding when possible; some of the reductions were included
in various components of the department's funding streams,
but were not generally associated with staff reductions.
HANNAH LAGER, BUDGET MANAGER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, replied that the
department had focused on general fund cuts to reach the
target requested by the administration. Additionally, DCCED
had looked at places where the budget was over inflated by
things like receipts that it was not actually collecting.
The department had focused on where it had absorbed costs
and duties performed by positions it was not filling; some
had not been filled in quite some time and had been
deleted. She relayed that more detail was published online.
The strategy had been to make reductions while minimizing
the impact on existing employees and maximizing services
provided to the public.
Representative Munoz asked how many positions Ms. Lager was
speaking about. Ms. Lager replied that four full-time
positions had been deleted from the budget and there were
many the department was planning to hold vacant.
Representative Munoz asked for the anticipated ASMI and
tourism marketing increments in the governor's amended
budget. Ms. Lager replied that the tourism budget had
initially been $15.2 million (general funds), which had
been reduced to approximately $12.5 million. The proposed
ASMI budget had been reduced from $7.3 million to $6.3
million.
Co-Chair Neuman thanked the department for its
presentation.
2:29:39 PM
AT EASE
2:33:16 PM
RECONVENED
^FY 15 GOVERNOR'S SUPPLEMENTAL BUDGET OVERVIEW
2:33:22 PM
PAT PITNEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
(OMB), OFFICE OF THE GOVERNOR, provided a chart titled
"FY2015 Supplemental Bill" (copy on file). She addressed
page 1 and relayed that the most significant item was on
line 6 for the production, sale, and use of marijuana under
the Alcoholic Beverage Control (ABC) Board for $785,000.
The page included three smaller increments on lines 2, 4,
and 5 related to Affordable Care Act reporting compliance
and caseload for the Public Defender Agency and Office of
Public Advocacy.
Co-Chair Neuman noted that some additional money had been
allocated to caseworkers in a bill sponsored by
Representative Gara. He noted that money had been allocated
to foster care recipients aged 16 to 21; there had been
additional costs associated due to the caseload backlog and
litigation.
Representative Kawasaki remarked that the DCCED
commissioner had testified that if the increment for the
ABC Board was not approved it would be an unallocated cut
to the department. He noted that the increment related to
the production, sale, and use of marijuana did not show the
revenue side of the equation. He wondered if revenue would
be reflected in the FY 16 budget. Ms. Pitney indicated that
revenue had not been estimated for FY 16. Revenue would not
be reflected in the chart currently before the committee
because it pertained only to the FY 15 supplemental budget.
The potential revenue had been estimated at $2 million to
$20 million. The administration was assuming that the first
year of implementation would not be cost neutral; it was
anticipated that much would be learned in the first four to
six months of the implementation. She hoped that the FY 16
supplemental would show a $20 million revenue line item
[related to marijuana revenue].
2:38:17 PM
Representative Wilson pointed to lines 4 and 5 on page 1
related to the Office of Public Advocacy and Public
Defender Agency caseload backlogs. She asked if any headway
had been made on the backlog or if it continued to
increase. She presumed an increment would be included in
the budget the following year. She requested additional
information.
Co-Chair Neuman believed a backlog had been created because
there were new applicants in the foster care program that
had been expanded via legislation. He stated that
Representative Gara would know more about the situation.
Ms. Pitney relayed that she would follow up on
Representative Wilson's question.
Representative Gattis asked about a $2 million education
increment on page 1, line 7. She wondered how the $2
million figure had been derived. Additionally, she wondered
how the money would be distributed (e.g. based on Average
Daily Membership). She wondered how and where the increment
would fit in the budget.
Ms. Pitney answered that the Public School Trust Fund
contained earnings, which were reinvested back into the
fund; the money was spent first from the trust and then
from the general fund for any additional amount. She
explained that when $2 million was put into the trust, it
meant $2 million less would be taken from the general fund.
The increment accounted for the earnings that were
currently accrued into the trust.
Ms. Pitney moved to page 2, line 8 that contained an
increment for the wood bison transport. She detailed that
legislation had been worked on the prior session to allow
receipt of federal funds to conduct the wood bison
transport. She looked at lines 9 through 11 related to the
growing number of children in foster care due to
legislation that increased the maximum age children were
allowed to remain in care. The request was based on program
changes and in the acceptance of social security income
associated with clients involved.
Representative Gara asked for verification that the
increment was based on an increase in the number of kids
coming into care. Ms. Pitney replied in the affirmative.
She detailed that line 9 represented additional revenue
collected as well and the ability to accept the revenue.
2:42:34 PM
Representative Gara spoke to the purpose of the
supplemental budget. He addressed foster care and discussed
that social workers with caseloads that were 50 percent
higher than they could handle, could not get their jobs
done. The social workers could not get kids into adoption,
which would save the state money. He wondered why there was
never supplemental money to help with the issue.
Ms. Pitney replied that line 11 related to the growing
number of subsidized adoptions and guardianships.
Representative Gara remarked that there were currently 849
kids waiting for adoption.
Representative Wilson stated that the state was providing
funds to parents once a child was adopted and the number
was increasing. She wondered at what age in a child's life
the state stopped paying the funds. She wondered how many
children were included in the category. She believed it
should be possible to ascertain a more accurate cost
figure. She remarked that the cost was another $1.7 million
in the current year. She noted the cost was for children
who had been adopted. She assumed the state would still pay
the amount annually.
Ms. Pitney replied that she would follow up on the
question. She moved to page 3, line 12 that contained the
largest supplemental item, which totaled $92 million for
Medicaid advanced payments. She detailed that the item
related to charges incurred in FY 14 as a result of system
limitations at the time. She elaborated that the
expenditures had not been booked or charged relative to the
financial statement; therefore, the charges had rolled over
to FY 15 and $114 million in general fund for Medicaid had
lapsed in FY 14. She explained that the money had existed
in FY 14 if the state had been able to finalize and record
the payments and charges, but the Division of Legislative
Budget and Audit had determined there had not been a
sufficient record to close the items in FY 14.
Vice-Chair Saddler asked for confirmation that the state
would depend on the system for processing Medicaid claims
in the future. Ms. Pitney replied in the affirmative.
Vice-Chair Saddler wondered if it would be wise to expand
Medicaid before the system problems were rectified in order
to avoid similar issues in the future. Ms. Pitney replied
that the Department of Health and Social Services (DHSS)
was working diligently on ensuring the system was up and
running. She stated that an efficiently running system was
central to business and to the state's medical providers;
ensuring the system was running correctly well in advance
of the expansion date was of the highest priority.
2:47:12 PM
Vice-Chair Saddler wondered if from a budget perspective it
would be helpful to avoid Medicaid expansion until the
state was positive the system was working correctly. Ms.
Pitney answered that the savings the state would receive
through Medicaid expansion and the service delivery
provided made it a smart and critical option from the
administration's policy standpoint. She detailed that the
system was a critical point of need and the agency was
working to ensure it was running correctly. She had
confidence DHSS would have the system up and running.
Vice-Chair Saddler wondered if Ms. Pitney would advocate
for expansion if the system was not up and running. Ms.
Pitney would follow up on the question.
Representative Kawasaki spoke to the Medicaid advance
payments. He asked for verification that an error by Xerox
(when the system had been adopted 1.5 years ago) had led to
a significant number of late payments to providers. He
wondered if the situation involving Xerox was part of the
problem. Ms. Pitney answered in the affirmative.
Representative Kawasaki wondered if money would potentially
come back to the state in some form as a result of ongoing
discussions with Xerox. Ms. Pitney replied that she did not
know about the potential of money being returned to the
state or about the current status of discussions with the
company. She relayed that the discussions were ongoing and
noted the urgency of the situation.
Co-Chair Neuman added that separately from the line item
under discussion, there were some lawsuits underway through
DHSS. He noted the line item included money that had been
approved by the legislature for Medicaid expenditures
through payment reimbursement. He detailed that there had
been an accounting problem; the money had still been
deposited into the bank. He furthered that because of the
accounting problem it had become an FY 15 issue. The item
entailed money coming out of the bank to cover the costs.
2:50:08 PM
Representative Gara discussed that there had been a number
of computer systems that had not worked. He asked Ms.
Pitney to let the committee know if there was an indemnity
provision to protect the state when the systems did not
function correctly. He remarked that committee members were
aware of providers that could potentially sue the state
because they had gone out of business as a result of
nonpayment. He opined that the state's programming
contracts should include indemnity provisions to provide
protection when systems did not work.
Co-Chair Neuman relayed that the DHSS subcommittee would
hear about the Medicaid Management Information Systems
updates and contracts.
Representative Munoz noted that the item description stated
that the expenditures were not eligible for a federal
match. She wondered if it was due to the problems with the
computer system or other issues. Ms. Pitney deferred the
question to DHSS.
MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, replied
that DHSS had worked with the Centers for Medicare and
Medicaid Services (CMS) to claim the advances federally and
to receive the federal share. She explained that DHSS had
worked everything out with CMS and the Department of
Administration and had made the claim federally; however
Division of Legislative Budget and Audit had told DHSS that
it did not meet the level in a new fiscal year; therefore,
the entries had been reversed. The state would receive
federal match for all of the claims.
2:53:04 PM
Representative Gara asked Ms. Brodie if there were
indemnity agreements to keep the state off the hook if
problems were caused by programs it purchased. Ms. Brodie
replied that the state did not have indemnity clauses.
Alternatively, it had liquidated damages; there was a
hearing in front of an administrative law judge on February
17 [2015] to determine whether the liquidated damages
applied. She explained that it was a way to get some of the
state's money back and it would not prevent the state from
its ability to claim the actual damages. She had outlined
all of the actual damages, which far outweighed the
liquidated damages.
Ms. Pitney returned to page 3, lines 13 through 16
pertaining to management fees associated with investment
earnings on particular funds. She classified the items as
"good news" payments. The increase in fees for management
under the Department of Revenue (DOR) had resulted from a
positive earnings year. She turned to page 4, line 17
associated with the Alaska Municipal Bond Bank Authority
(AMBBA). She detailed that there were additional regulatory
environment expenses associated with the oversight of the
municipal bond market; the item was to account for the
costs within AMBBA's funding authority. Lines 18 through 20
were technical adjustments related to the Alaska Retirement
Management Board and a year-end balancing of the retirement
systems; all of the items were net-zero technical
adjustments. Line 22 reflected that Edna Bay had become an
organized community; an organizational grant was provided
to the newly formed city to help with the cost of
formation.
Co-Chair Neuman asked if the grant was provided by statute.
Ms. Pitney replied that the organizational grant
specification for a newly formed city was included in AS
29.05.180.
2:56:56 PM
Ms. Pitney turned to page 5, line 25. She explained that
Division of Legislative Budget and Audit had done the
single audit for the federal programs until the present
year. The division had requested that the administration
hire a third-party audit firm to do the single audit for
DHSS's federal programs. The request represented the cost
of the single audit. She relayed that she had mistakenly
reported to the Senate Finance Committee that the item was
for a three-year contract.
Co-Chair Neuman asked for verification that the item
represented the cost for a single year. Ms. Pitney replied
in the affirmative.
Vice-Chair Saddler asked if it was less expensive to
contract out for the audit versus doing the work in house.
Ms. Pitney replied that she would have to consult with the
Division of Legislative Budget and Audit to determine
whether contracting out was less expensive. She relayed
that the division felt the audit needed a level of
attention and expertise that had been hard to achieve under
the former system.
Vice-Chair Saddler would enable the division to catch up on
the backlog of audits and allow it to take on the audit for
DHSS's federal programs again in the future. Ms. Pitney
would replied that she would follow up on the question with
DHSS and the Division of Legislative Budget and Audit.
SANA EFIRD, ASSISTANT COMMISSIONER, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES, replied that the backlog would be in
the Division of Legislative Budget and Audit and not DHSS.
She asked for clarification on the question.
Vice-Chair Saddler wondered if outsourcing the audit for a
while would allow the work to be brought back in house once
the backlog had been addressed. Ms. Efird believed the
backlog was for the Division of Legislative Budget and
Audit. She added that the line item would give DHSS the
opportunity to work with a contractor with expertise in all
of the department's large federal programs.
Representative Kawasaki understood that Division of
Legislative Budget and Audit would typically perform the
audit; therefore, he wondered why the request was not being
requested through the legislature. Ms. Pitney replied that
it could be. The Division of Legislative Budget and Audit
had asked the administration to manage the contract and its
funding. She stated that the presumption was that the cost
of the audit would be the same; essentially it was a
transfer of costs.
3:01:13 PM
Representative Wilson surmised that the state was auditing
federal programs to ensure the money was spent
appropriately. She stated that in the past there had been
money in the federal funds designated specifically for
audits. She wondered why the money would not come from
federal funds.
Ms. Efird replied that she did not know the percentage of
compliance for each of the federal grants or what would be
available for audits in each grant. The department was able
to collect some federal funds through its (DHSS) cost
allocation public assistance plan. She believed the line
item represented the amount of money it had cost the
Division of Legislative Budget and Audit based on the hours
it had spent on the audit.
Representative Wilson thought that a portion of federal
funds was supposed to be reserved for audits. For example,
a certain percentage of a $1 million grant was reserved for
audits. She wondered where the money went. Ms. Efird would
follow up with the information.
Ms. Pitney briefly highlighted the cost associated with a
recent settlement agreement with the Alaska Correctional
Officers Association on page 5, line 26.
Co-Chair Neuman asked for further detail. Ms. Pitney
replied that the item represented cost incurred from a
previous case that had been brought to the state and
settled. She explained that the Senate Finance Committee
had requested information on lessons learned in order to
avoid a similar settlement in the future.
Co-Chair Neuman noted that the issue went back to labor
negotiations between 8-hour and 12-hour shifts. He believed
DOA had concerns about vacation time that was accrued with
over time; therefore, it had gone to arbitration.
Vice-Chair Saddler wondered if it was a settlement or a
result of arbitration. Ms. Pitney would follow up on where
it had been in the process. She detailed that it had been a
settlement versus a judgement or claim. She did not know if
there had been court hearings or other.
Co-Chair Neuman asked Representative Edgmon to look into
the issue.
3:05:15 PM
Ms. Pitney moved to item 27 on page 5 related to the
Emerging Energy Technology Project. She detailed that the
$345,000 in federal funds was receipt authority for
additional federal funds that were available, but could not
be used without additional receipt authority. She looked at
item 28 related to the repeal two pieces of the Ormat
Nevada, Inc. Mount Spurr Geothermal Project. She elaborated
that the general fund portion was reappropriated in the FY
16 capital budget; the other portion related to designated
general funds.
Co-Chair Neuman asked for the total funds that had gone out
in the grant. He believed there had been $20 million to $25
million. Ms. Pitney replied that the total had been $25
million.
Co-Chair Neuman observed that $23 million had been used. He
wondered if anything had been learned. Ms. Pitney answered
that quite a bit had been learned, but the cost of getting
to the energy site and of transmitting the energy to
consumers was past the point of being economical.
Co-Chair Neuman noted that the cost was $0.17 per kilowatt
to get the energy to Beluga, Alaska, which was what he
already paid in Big Lake.
Representative Guttenberg discussed that when he had first
read the line item he had surmised that a grant had been
awarded, but no hot water source had been located. He now
understood that an economical source of hot water had not
been found.
Ms. Pitney answered that promising geothermal sources had
been located. She reasoned that if there had been something
else the company wanted to do on top of the geothermal
source, it would probably have been worth the cost. She
moved to page 6, line 29. The line item was a net zero and
was a reappropriation on the bill associated with the
Interior gas project. She elaborated that in the original
bill the money had been specific to a North Slope gas
solution; the item expanded the scope of the project to
allow for in-state gas solutions.
Co-Chair Neuman asked why the increment was included in the
supplemental as opposed to introducing legislation to
address the issue. Ms. Pitney replied that the development
was relatively new. The administration believed the item
was appropriate for the supplemental. She noted that
amended language would also be necessary. She explained
that the item had been included in the supplemental due to
the timing. She stated that it was possible additional
legislation could be needed.
3:09:32 PM
Representative Wilson asked for verification that the line
item was outside of legislation passed by the legislature.
Ms. Pitney replied that the amount had been included in
legislation that had passed and had been reflected in the
overall budget.
Representative Wilson believed that if the increment was
associated with the legislation, the legislation needed to
change to reflect what the project may have to be instead
of including the item in the supplemental.
Representative Kawasaki referred to the line item
description, which listed the section and SLA2013 related
specifically to the Alaska Industrial Development and
Export Authority (AIDEA) Sustainable Energy Transmission
and Supply fund and the reappropriation. He stated that the
only controversial language was related to North Slope
natural gas. He wondered if the $57.5 million balance would
hinder AIDEA's ongoing due diligence project if the item
was not included in the supplemental budget. He wondered if
it was necessary to provide the funds early because the
$57.5 million was part of the language.
Ms. Pitney replied that the administration recognized that
the supplemental budget ran at approximately the same pace
as the capital budget. She elaborated that including the
project within the supplemental was a transparent way to
get the information out. The administration also expected
it to take a revision of the legislation. The timing had
been anticipated that it would be at the end of session
before the legislation was passed; the project was moving
forward, but no action would be taken outside of the
existing authority.
Representative Kawasaki wondered if the language speaking
to the North Slope in particular in SB 23 [legislation
passed by the legislature in 2013 related to AIDEA and
Liquid Natural Gas project financing] and in the capital
budget section hampered AIDEA's ability to discuss the
ongoing negotiations on the purchase of Pentex [Pentex
Alaska Natural Gas Company, LLC]. Alternatively, he asked
if AIDEA could act on its own.
Co-Chair Neuman noted that AIDEA acted as a separate entity
and had its own board.
Ms. Pitney would follow up on the question at a later date.
Representative Wilson asked about the last time legislation
had been changed in a supplemental budget. She did not
recall the situation occurring in the past. She did not
want to start something they could be sorry about in the
future. Ms. Pitney replied that she would follow up on the
question.
Co-Chair Neuman believed the occurrence may happen on a
regular basis. He reasoned that the legislature approved
reappropriations frequently.
Ms. Pitney moved to a repeal of the Alaska Digital Teaching
Initiative on line 30, page 6. She relayed that the
existing program could be managed without adding an
additional program. The administration believed it would be
good to stop the program before it got started. Lines 31
and 32 (pages 6 and 7) related to the Department of
Environmental Conservation (DEC). She detailed that DEC
provided several grants for sewer and water projects; there
were currently grants out to a few communities. Line 31 was
a reappropriation of funding remaining from completed
projects. The remaining funds were pooled and deposited
into the Spill Prevention and Response (SPAR) account. She
explained that the account ran on a $0.05 per barrel of oil
surcharge on oil running through the Trans-Alaska Pipeline
System (TAPS). She furthered that when there had been 2
million barrels of oil running through TAPS it had been
sufficient to cover the program; however, production had
declined and 500 thousand barrels was not sufficient to
cover the program. The reappropriation would buy time to
develop a more holistic approach to manage SPAR duties. She
added that the increment would only provide temporary
solution.
3:16:32 PM
Co-Chair Neuman remarked that the SPAR fund was currently
empty due to a decline in oil throughput. He explained that
the surcharge had not been changed in a number of years.
Representative Wilson wondered if the funds had matched
federal funds for sewer and water for small communities.
She specifically mentioned that funds had been allocated to
North Pole for sewer upgrades. She wondered if the state
was sweeping only state dollars into the SPAR account and
if some federal matching funds had been lost.
Ms. Pitney replied that the line item represented the
unspent, unobligated balance of general funds that had been
designated to projects. She explained that if there was a
match, it was garnered based on the cost of the project.
Representative Wilson asked if some federal matching funds
had remained after the completion of the projects. She
wondered what had come of any remaining federal funds.
Ms. Pitney answered that federal matching funds were given
when the state spent its portion of the funds; if the state
funds were not spent, the match was not received. She
relayed that traditionally (under more positive financial
environments) communities asked for remaining funds (i.e.
$25,000 to $50,000) to be reappropriated to another project
in their area, which may or may not have any federal
opportunity. An alternative policy option would be to pool
the remaining funds for use on a water and sewer project in
the next community. She explained that the increment was a
way to use existing resources to cover the SPAR account
shortfall at present, which would give the state more time
to determine a more holistic solution.
Representative Wilson asked if federal funds would have
been available for a water and sewer project in another
community if the state elected to use remaining project
funds for that purpose. She was curious how much money
could have been utilized for the purpose. She understood it
had been a choice, but she thought the state had given up
federal funds that were not reflected on the handout.
3:21:03 PM
Co-Chair Neuman noted that there was additional background
material available for members to review.
Ms. Pitney pointed to judgments and settlements on lines 33
and 34 (page 7); line 33 related to actual judgments and
settlements and line 34 was for any judgements and
settlements prior to the end of FY 15. Line 35 expanded the
scope of Department of Public Safety funds for the Alaska
Public Safety Information Network to other information
technology. Line 36 was a $3 million increment for any
additional fire suppression funding for FY 15. Line 37
allowed for movement in the percentages called for in the
fuel trigger mechanism. She explained that the fuel trigger
mechanism set a percent for each agency; sometimes the
bounds of the percentages did not accommodate the actual
costs faced by an entity. The line item would allow an
expansion of the boundary of percentages to most closely
align the distribution of the fuel trigger mechanism to the
entities with the costs associated.
Ms. Pitney addressed line 38, which reflected funds
leftover from redistricting costs that would be deposited
back into the general fund. Lines 39 through 43 included
funds that would be deposited back into the general fund.
Line 39 reflected leftover funds from school debt
reimbursement projects that had been paid off; overall,
school debt reimbursements had decreased by $5.4 million.
Representative Pruitt asked what caused the debt
reimbursement to go down.
3:24:38 PM
Ms. Pitney replied that under the school debt reimbursement
program a community passed a school bond. She explained
that if a community began paying debt service 20 years
back, the debt service was completed and had therefore the
project had fallen off the list of required debt service.
She explained that subsequently the obligation for school
debt reimbursement had decreased by $5.4 million.
Representative Pruitt asked for verification that the $5.4
million decrease was associated with one project. He noted
that Anchorage continued to add school debt; therefore, it
did not make sense to him that there was money left over.
Ms. Pitney would follow up with the data. She believed
there would be a downward trend; schools that had been
built 20 years earlier would drop off the list.
Representative Pruitt asked if the change in statute
implemented the prior year impacted the reimbursement rate.
He hoped the downward trend would continue because nothing
was being added. Ms. Pitney answered that she would provide
further information.
Ms. Pitney pointed to an interest transfer from the Alaska
Marine Highway System stabilization fund. Lines 42 and 43
represented significant policy calls and reflected the
repeal of one-time education funding that had been passed
in legislation the preceding session. She explained that
the $32 million in FY 16 would result in a 2.5 percent
decrease in K-12 funding (line 42). The reduction of $19
million in FY 17 was closer to a 1 percent reduction (line
43).
Co-Chair Neuman remarked that the two education funding
items would have additional discussion going forward.
Ms. Pitney addressed ratifications on lines 48 through 63.
She explained that the ratifications were prior year
expenses that had been accounted for; the lines reconciled
the expenses to the budget that had passed from an
accounting perspective and represented necessary technical
adjustments.
HB 72 was HEARD and HELD in committee for further
consideration.
HB 73 was HEARD and HELD in committee for further
consideration.
Co-Chair Neuman discussed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 02.05.2015 DCCED Overview HFC - Final.pdf |
HFIN 2/5/2015 1:30:00 PM |
|
| FY2015_Supplemental_Detail.pdf |
HFIN 2/5/2015 1:30:00 PM |
HB 94 |
| FY2015_Supplemental_Summary.pdf |
HFIN 2/5/2015 1:30:00 PM |
HB 94 |