Legislature(1999 - 2000)
02/23/1999 01:40 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 100
"An Act making and amending capital, supplemental, and
other appropriations, and appropriations to capitalize
funds; ratifying certain expenditures; and providing
for an effective date."
Co-Chair Therriault passed the gavel to Co-Chair Mulder.
ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, advised that the Governor's Office has worked
diligently to bring the supplemental request down. As
indicated by the spreadsheet, by addressing only the
disasters, it still was not small enough to fit within last
year's cap of $3.5 million dollars. She emphasized that
there has been progress during the last six years, to bring
the Supplemental Budget under control. However, with
unusual circumstances and unanticipated expenditures, the
amount held might not be sufficient.
Co-Chair Mulder requested that updated information be
provided to the Chairman's office and to the appropriate
Subcommittee Chair offices. Ms. McConnell agreed to do so.
Ms. McConnell addressed the "belt-tightening" measures being
attempted by each department. She noted that the Governor
had placed restrictions on departments in three areas:
? Hiring,
? Travel, and
? Purchasing, in the area of contractual services
and supplies.
In order for the departments to meet those numbers, each
amount was itemized in the bill. The Governor is serious
that the departments not exceed the lower amount proposed in
the budget.
Ms. McConnell pointed out that the supplemental was
separated into categories of disasters, judgements and the
Cleary related issues.
Co-Chair Mulder inquired if the total increase proposed in
the supplemental budget was $28 million dollars, offset by
the $16.5 million dollars already provided for in the
current year, and additionally, offset by $6.2 million
dollar "belt tightening", with a net increment of $5.2
million. Ms. McConnell stated that was correct, although,
indicating that the Cleary amount would change that number.
Co-Chair Therriault asked if the Administration had
requested that the departments link reductions to off set
the increases which they were not able to get around. Ms.
McConnell replied that the departments were instructed to
absorb everything possible within the program. If the
department was not capable of doing this internally, they
were requested to look at other areas within the department
where a delete could offset the proposed increase.
Additionally, each department was instructed to " tighten"
their belt.
Co-Chair Mulder asked how the savings was determined. Ms.
McConnell replied that the above mentioned three items were
initially targeted. Following that, the Administration
removed from the calculations all those areas which could
not responsibly cutback such as 24-hour institutions and
trooper detachments. Travel was then heavily targeted.
DISASTERS
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS - #1
Ms. McConnell stated that the change is a request for a
lapse date extension from 1999 to 2001. This change would
recognize that federal funds received earlier were to be
used to complete many projects. However, she pointed out
that some of the projects were not finished during the
designated allocation period.
Co-Chair Mulder asked if those were appropriations in which
the local community was required to make a match in order to
receive the grant. Ms. McConnell replied that would be a
portion of the responsibility.
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS - #2
? Southeast Rain/Wind Disaster
? Endicott Mountain Flood
? Western AK Fisheries Disaster
Ms. McConnell spoke to the Western AK. Fisheries disaster.
She provided members with a handout addressing the concern.
[Copy on File].
Ms. McConnell pointed out that this had been the second year
in a row with disastrous fish runs in Western Alaska. It
has been suggested that El Nino created a condition of ocean
warming, which created a situation so harsh that fewer
numbers of fish spawned.
The Office of the Governor began working with the federal
government in order to educate them regarding the severity
of the loss, comparing it to one of a crop failure from a
drought. She emphasized that Alaska's "major crop" of fish
was being affected. Following much discussion, the federal
government understood Alaska's predicament and began the
process of declaring a state disaster. The process begins
with a Declaration of Disaster, at which time, the
Administration assessed that $12 million dollars would be
needed to respond to that disaster.
The situation was addressed in several ways. The first was
to work with the fishermen to restructure their loans. The
program of individual and family grant assistance was
started. A different approach was used, which established a
limit of $1500 dollars per eligible person. In order to be
eligible, a person would need to be directly connected to
the fisheries as a permit holder, a crew license holder or a
process worker.
Ms. McConnell pointed out that the Administration chose not
to be involved in the secondary effects. She emphasized how
stringent the criteria requirement was. The fish runs had
to be 50% less than the 10-year average.
Ms. McConnell reiterated that the assistance consisted of
$1500 dollars per individual who met the criteria (or a
$5000 dollar cap per family). No cash was provided, but
rather a vendor payment system was established to insure
that the assistance went to basic essential living expenses
such as food, home heating fuel, electric, power and water
sewer services.
Ms. McConnell continued, the State began working with the
federal government and ultimately secured $50 million
dollars to be spread throughout the entire disaster area for
several categories of activities.
Ms. McConnell noted that the original $12 million dollars
broke down into the following categories:
? $9 million dollars for family and grant
assistance;
? Funding for delivery of fish to three communities
which receive no commercial salmon and/or
subsistence food.
? $40 thousand dollars for transporting emergency
food aid from the federal government and
distributed through food banks;
? $400 thousand dollars was set aside to address
special social services such as crisis counseling.
? Additionally, $1.5 million dollars was set aside
to match the $7 million dollar Magnuson-Stevens
money in the prior year.
? Lastly, there were administrative expenses for
distributing the monies.
Ms. McConnell noted that the federal government has
reimbursed the State $2.4 million dollars of the original
$12 million dollars. She emphasized that if the State had
not responded to this disaster, we would face other types of
disaster expenditures such as emergency food supplies to be
flown out during the winter or emergency fuel supplies flown
out. She stressed that this was not only an economic
disaster, but also a natural disaster.
Co-Chair Mulder questioned the emergency living expenses of
$8.1 million dollars. He noted that equated roughly to
$1500 per individual.
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
replied that the $8.1 million dollars represented 6100
grants received and approved. Ms. McConnell clarified that
5500 applications were received some of which were
applicable to entire families.
In response to Co-Chair Mulder, Ms. Carroll commented that
funds had been paid directly to the vendors, not to the
individuals. Co-Chair Mulder understood that some vendors
still have outstanding bills. Ms. Carroll noted that she
had not received a lot of complaints from vendors not
receiving their funds, although, there were instances that
vendor's funds had to be corrected.
Co-Chair Mulder asked if individuals had the authority to
determine which vendors they wanted to use. Ms. Carroll
explained that had been negotiated with each applicant.
In response to Representative Bunde's inquiry regarding the
ten-year average determination, Ms. McConnell explained that
the requirement was that the fish run be no more than 50% of
a ten-year average. If a community was in an area with less
than 50% of runs and other employment opportunities existed,
that community would not be included in the disaster area.
In most of these areas, if the population is not able to get
money from commercial fishing, there is usually no other
income options.
Representative Bunde questioned the State's minimum match
requirement in order to receive Magnuson-Stevens $7 million
dollars. Ms. McConnell replied it would cost Alaska $1.5
million dollars and that the nature of the assistance was
directed by the federal government. The applications were
completed for State aid the end of October, 1998. Current
applications are for federal assistance ($18 million
dollars) available for individual and family assistance.
Representative Bunde asked about the chum salmon which had
been flown into the Upper Yukon. Ms. McConnell corrected,
noting that chums were flown into the villages of Hooper
Bay, Scaman Bay and Chugiak and had been used for village
food and that the fish flown into Upper Yukon had not been
done with State funds. That project was entirely a
volunteer operation and those salmon were used for sled dog
food.
Co-Chair Therriault asked if there was $18 million dollars
still available in the federal program. Ms. McConnell
replied that the State received two Magnuson-Stevens
allocations. There was $7 million dollars under
consideration in May, 1998, in which the Legislature did
appropriate $125 thousand dollars to match the loan money.
Additionally, $1.5 million dollars of that disaster money
would be used to secure the rest of the money from the first
federal declaration. Subsequently, the State received $50
million dollars from the federal budget just currently
passed. $18 million dollars of that is to be used for
family grant assistance. A portion of that money will be
used to reimburse the State for the $4 million dollars
spent.
(Tape Change HFC 99 - 28, Side 1).
Ms. McConnell emphasized that the State has been warned that
it will be impossible to receive federal aid unless Alaska
makes a contribution. Senator Stevens has stressed this
need. Co-Chair Therriault asked what the requirement was to
receive funds from the Magnuson-Stevens Act. Ms. McConnell
offered to research that information. Co-Chair Therriault
asked if the State had overspent or overmatched. Ms.
McConnell believed the State had not overspent. The $1.5
million dollars was a match requirement for receiving the
first $7 million a year ago. She did not know if the feds
used a formula to make that determination or if it was a
case by case scenario.
Co-Chair Therriault asked why to date only a small portion
of the monies had been expended. Ms. McConnell noted that
given the timing of when the funds were available, most of
the projects could not be undertaken during the last
construction season because of the weather and have been
postponed until the current construction season. That
resulted from last year's funding and requires a non-federal
contribution.
Co-Chair Therriault referenced the Millers Reach fire where
the average payment per household was $13 thousand dollars.
He inquired what that funding was specifically allocated
for. Ms. Carroll replied that funding was designated for
anything lost except the house itself, such as clothing,
food, tools, etc.
Representative Austerman noted that he was having difficulty
following the total disaster dollars being discussed. Ms.
McConnell explained that $7 million was the total received
from last year's federal aid. The Legislature did not
approve general funds for that. The Administration had
requested $1.5 million dollars as the general fund match to
receive the $7 million dollars. The Legislature did approve
a small portion of that request for loans, but not the
entire match. The expectation was that local communities
could come up with the remainder. Ultimately, that was
impossible.
Representative Austerman asked if the $50 million dollars
was the total for this year and last year. Ms. McConnell
stated that it did not include the $7 million from last
year. A portion of that $50 million dollars was how the
State was able to reduce the original $12 million disaster
amount to $9.6 million dollars.
Representative Austerman asked if there was a breakdown of
how the $50 million dollars would be handled. Ms. McConnell
replied that there was in the material previously submitted
to the Legislative Budget and Audit Committee (LBA). She
offered to provide that information to House Finance
Committee members. Ms. McConnell reiterated that the State
would not have been able to secure the $50 million for
assistance if State money had not been contributed.
Representative Austerman questioned how the Federal
Emergency Management Agency (FEMA) had become involved. Ms.
McConnell stated that they were involved in the organization
of the program. FEMA was designated by the White House to
be the agency to bring together all the other federal
agencies in order that the $50 million dollars is managed.
Representative Austerman asked for a breakdown of "other
monies". Ms. McConnell noted:
? $10 million dollars of low income Home Energy
Assistance money; and
? $400 thousand dollars in the Department of
Agriculture for emergency food aid. These monies
are tied to the fishery disaster.
Representative Austerman asked the length of time that the
Administration would extend the disaster concept. Ms.
McConnell replied that the Administration has not yet
formulated a recommendation on how to address that concern.
She acknowledged that how to assess a situation in which a
disaster occurs over many months or years is an issue that
does need to be discussed.
Co-Chair Mulder advised that he had directed each of the
subcommittee chairs to address their piece of that puzzle.
He noted that Representative Bunde would take the lead and
be the person to review the Western fisheries disaster.
Representative Williams asked how much of the $50 million
dollars had been obligated. Ms. McConnell stated that a
substantial part of that money would not come through the
State; it will be going directly through the Federal
Economic Development Administration to projects in various
communities. That agency is currently in the process of
evaluating which projects to fund. After the State receives
the federal reimbursement, we will have expended $9.6
million dollars. The State will be reimbursed for $2.4
million dollars of State funds, which are anticipated soon.
Representative Grussendorf pointed out that the fisheries
disaster has caused people to loose their livelihood.
Representative Bunde questioned when does a natural disaster
become an economic disaster, and how long will it be
supported if it becomes a continuing natural trend.
Representative G. Davis agreed that at this time, the State
is looking at funding commercial fishing. He questioned how
that would be handled in a long-term commercial disaster.
Representative Grussendorf pointed out that in the past, the
State has subsidized oil companies to allow them to continue
to conduct business.
Co-Chair Mulder questioned how much money would be required
from the State to secure the federal money. Ms. McConnell
replied that the State disaster was declared with $12
million dollars. Portions of those funds were reimbursed.
Co-Chair Mulder asked if the Legislature were to deny the
$1.5 million dollar match of last year, would that endanger
the $50 million dollars. Ms. McConnell commented that she
did not know if that would endanger the $50 million dollars,
but, it would definitely mean that the State would not
receive the $7 million dollars. She also added, the issue
is not whether the communities are willing to make the
match, the issue is whether they have the money to do it.
The effect of not having a fish run has strongly affected
the local treasuries.
In response to Representative Austerman, Ms. McConnell
acknowledged that this situation is very different from an
economic disaster, beginning with the fact that we do not
have fish. These are the differences between a loss of
price and loss of market. The result is an economic
disaster. Representative Austerman noted his surprise that
the situation had been tied to the El Nino condition.
Representative Bunde requested a list of communities
involved in the subsidies.
Co-Chair Therriault asked if the communities where the fish
had been transported to, had been given the option to
purchase food in the local stores. He believed that could
generate local sales tax which would be more helpful to the
local treasury. Ms. McConnell stressed that these people
had no commercial income and they were in need of a basic
food supply. She noted that she was surprised that the
request for fish was lower than anticipated and that the
families took only the minimum that they needed.
Co-Chair Mulder asked the combined population of the
affected villages. Representative Foster responded that it
was approximately 2500 residents.
(Tape Change HFC 99 - 28, Side 2).
Representative Foster added that the village stores do not
keep a large surplus of food supplies. Ms. McConnell noted
that the Red Cross had undertaken emergency food deliveries.
She added that under the circumstances, the project was cost
effective.
Ms. McConnell pointed out that in past years, there was a
budget for disaster funding with annual appropriations.
That no longer exists. Representative Foster echoed the
concern, pointing out that in previous years, budget cut
backs have come from the disaster fund, knowing that a
supplemental would cover those expenditures.
NICO BUS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS AND DEPARTMENT
OF NATURAL RESOURCES, addressed the other two disasters
listed in Section #2. Last year in October, there was a
major rainstorm in Southeast Alaska with over six inches of
rain in a 24-hour period. The Governor declared a State
disaster in the Borough of Haines and the City and Borough
of Juneau. The request for $2.7 million dollars was to be
used for road washout. The nature of the expenditure was
for emergency repairs for the roads and highway.
Representative Williams asked how much had been used for the
Fritz Cove portion of the storm repair. Mr. Bus replied
that the amount of money approved to the Department of
Transportation and Public Facilities was $1.3 million
dollars, to be used for various road projects. The
Department is working with the Federal Highway
Administration (FHA) to get supplemental funding.
Co-Chair Therriault asked if the Department of
Transportation and Public Facilities repaired the roads
rather than the local municipalities doing that work. Mr.
Bus pointed out that it was a natural disaster and qualified
under the State's criteria for emergency relief.
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, added
that FHA has specific guidelines on what they cover under an
emergency response. They consider anything out of the
normal operation of maintaining a road or building a road,
caused by heavy maintenance, to be considered normal.
Anything that is "extra-ordinary" or causes serious damage,
they provide guidelines for assistance. Those guidelines
are what the Department responded to for specific repair
work caused by the disaster. FHA will not cover less than a
$500 thousand dollar aggregate amount.
Representative Austerman asked if the costs had not been
associated with a "disaster", would they be coming through
the Legislature as a supplemental request. Ms. Slagle
replied that they would, but that a disaster situation helps
Department of Transportation and Public Facilities go to the
federal government to try to receive assistance.
Co-Chair Mulder asked if Fritz Cove road was a State or
local road. Mr. Bus replied that it was a State road and
the responsibility of Department of Transportation and
Public Facilities. Representative Moses noted that most
roads in the municipalities are state roads.
DEPARTMENT OF NATURAL RESOURCES - #3
Nico Bus stated that the fire suppression disaster request
was in the amount of $7 million dollars. Co-Chair
Therriault advised that Department of Natural Resources had
delivered two memo's indicating itemized information on fire
suppression.
Mr. Bus stated that the $7 million dollars would cover
expenditures to date for the period July 1st through
December 31st and the fixed costs of the Department for this
upcoming summer's activity. It does not include the price
of suppressed fires in May and June.
Co-Chair Therriault asked the total fire expenditure for
last year. Mr. Bus listed the three most expensive fires:
? Carter Lake fire which started in FY98 and went
into FY99, expanded from a military base;
? Tok fires which amounted to about $500 thousand
dollar to a $1 million dollar expenditure;
? Several Skagway fires which cost the State a
substantial amount of money.
? He added that there were over 523 incidents of
fires costing less than $50 thousand dollars each.
Co-Chair Mulder questioned when a fire starts on federal
land, who is responsible for putting it out. Mr. Bus
explained in the State of Alaska, the way in which fires are
fought is that the State is divided in half. The upper half
of the State, fires are fought by Bureau of Land Management
(BLM) and in the bottom portion, where most communities and
people live, are fought by the State. When a fire starts,
the resources are pooled between the two agencies.
Ultimately, the party that pays is the landowner. He
acknowledged that this is a complex system.
Representative Austerman asked what the "fixed" costs were.
Mr. Bus explained that like a fire hall, manpower and
equipment must be ready. In wildlife fires, this is
addressed with contracts with various aviation vendors. The
State must contract with vendors in January to guarantee
that they will be available during summer fire activity.
The fixed costs pay for those contracting fees.
Representative Austerman asked why those costs are not
included in the Department of Natural Resources operating
budget. Co-Chair Therriault commented that the fire season
crosses fiscal years, consequently, it was shifted to the
supplemental budget. Mr. Bus added, the Department of
Natural Resources has basically two operations. One is the
regular maintenance operation including mining and forestry
type concerns; fire suppression is more of an emergency
response which is kept separate. He noted that portion of
the budget is a big expense. It is isolated as strictly
emergency response and kept separate. That portion requires
about $4.5 million dollars in fixed costs and with the
additional costs of dealing with the fires. He added, those
costs average approximately $10 million general fund dollars
per year.
HB 100 was HELD in Committee for further consideration.
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