Legislature(2005 - 2006)HOUSE FINANCE 519
02/16/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB421 | |
| HB369 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 369 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 421 | ||
HOUSE BILL NO. 369
"An Act making special, supplemental, capital, and
other appropriations, amending appropriations, and
making appropriations to capitalize funds; and
providing for an effective date."
CHERYL FRASCA, DIRECTOR, DIVISION OF MANAGEMENT & BUDGET,
OFFICE OF THE GOVERNOR, reported that HB 369 was the first
supplemental introduced the first week of session. Early
introduction was important because HB 369 addresses high
energy costs experienced around the state. She spoke of the
requests as assistance to individuals and local governments
for high-energy costs. A large share of community
assistance is the Small Municipal Energy Assistance Program
agreed upon last session. This one-year program is being
considered for a second year. Power Cost Equalization and
the Bulk Fuel Bridge Loan Program are also up for
reconsideration.
Ms. Frasca highlighted the Low Income Home Energy Assistance
Program (LIHEAP), a state contribution to a federally funded
program. She overviewed various assistance programs covered
by this legislation. She pointed out that $23 million would
go to state agencies. The largest amount of that is for the
Alaska Marine Highway System, almost $15 million, and is
time-critical. There is $6.5 million for gas line work.
$500,000 is for the Artic Winter Games due to timing of the
games in early March. There have been several amendments
made since the bill was written.
2:03:41 PM
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
Section 3 - Community Advocacy
Bulk Fuel Bridge Loan Program $500.0 GF
SAMUEL THOMAS, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, explained that rural Alaskan communities are
highly dependent on petroleum products. He explained that
many of the problems stem from high heating costs. He
mentioned the Power Cost Equalization Program and the Alaska
Energy Authority Program. Last year the legislature
approved the Small Municipality Assistance Program to help
communities meet their needs. Each program has its
limitations. This year the legislature came up with the
Bulk Fuel Bridge Loan Program designed to help the
communities that don't qualify for a fuel loan administered
by Alaska Energy Authority to receive a short-term loan.
Since the program was started, most communities have repaid
the loan. The Rural Alaska Field Service program (RAFS)
really helped to administer the loan. He spoke of
additional funds requested to run RAFS. It all comes down
to high fuel costs.
2:13:01 PM
Co-Chair Chenault asked if one of the programs was designed
to try to keep the costs of fuel at the cost of what it was
two years ago. He shared an example of rising heating costs
in his area. Mr. Thomas said that is the intent of the
Department of Commerce.
Section 1 - Community Advocacy
Small Municipality Energy Assistance Program - SMEAP
$6,405.2 GF
Mr. Thomas explained that the SMEAP grant serves 135 small
cities in rural Alaska for the repayment of any indebtedness
to the bulk fuel revolving loan fund and for the purchase of
fuel.
Co-Chair Chenault responded that there are currently many
communities affected by this program, which was supposed to
be a one-year program. He wondered what the difference is
between Power Cost Equalization (PCE) and SMEAP.
2:19:18 PM
BILL ROLFZEN, LOCAL GOVERNMENT SPECIALIST, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, clarified the
difference between SMEAP and other programs. PCE is used to
benefit individual residents to reduce the high cost of
electricity, and SMEAP is a fuel program for municipalities.
Representative Kelly asked why schools were missing from the
list of recipients of fuel aid. Mr. Rolfzen replied that
most of the municipalities are too small to support a school
district. The program did not look at if the city had a
school or not, it only considered size. With the
elimination of revenue sharing, these communities rely on
funding for up to 40 percent of their operating budget.
Representative Kelly asked if there was any accounting for
alternative fuel sources. Mr. Rolfzen replied that only
population was considered.
2:23:07 PM
MARK SMITH, CROWLEY MARINE, ANCHORAGE, spoke in support of
the municipal funding part of the bill. He maintained that
this money is critical for communities that depend on these
funds, many of which are in financial distress.
Section 7 - Capital - Grant to "2006 Arctic Winter Games
Host Society"
Funding for the Arctic Winter Games that take place
March 5-12, 2006. $500.0 GF
BILL POPP, KENAI ECONOMIC DEVELOPMENT, ARCTIC WINTER GAMES
COMMITTEE, explained how the Arctic Winter Games are run.
He spoke about the history of the games, its goals, and
obstacles to those goals. He related how the games are
funded. In 1996 when the games were held in Eagle River, it
was a $1.2 million line item for the State of Alaska. The
current budget is at $5 million. He shared information
about funding sources. The private sector has come up short
with contributions this year due to the Katrina effect. He
requested an appropriation of $500,000 for the games in
March.
2:29:42 PM
Co-Chair Chenault asked about Department of Defense (DOD)
money. Mr. Popp responded that in late December his
committee was told that DOD funds were not available, which
had been previously earmarked for the Artic Winter Games.
DEPARTMENT OF CORRECTIONS
Section 4(1) - Institutional Facilities
Fuel Cost Increase $405.0 GF
SHARLEEN GRIFFIN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF CORRECTIONS, spoke of a request for
funds to cover the cost of increased fuel prices for
propane, natural gas, and heating fuel.
Ms. Griffin explained DOC A, 1/30/06, an amendment which
deals with the overcrowding situation in Fairbanks and the
need to convert a vacant building to house prisoners.
Fairbanks has the capacity of 211 offenders and is currently
running at 222 to 300 inmates. She spoke of increased
transport costs as a result of the overcrowded conditions.
In response to a question by Co-Chair Chenault, Ms. Griffin
replied that a tent was used last year, but was destroyed in
an escape attempt.
2:35:01 PM
Representative Stoltze referred to fuel cost increases and
asked if there are any Cleary vs. State of Alaska issues
that limit fuel efficiencies. Ms. Griffin spoke to Cleary
recommendations regarding temperature ranges. She noted
that Cleary is no longer a driving force due to the Personal
Litigation Act.
Ms. Griffin, referring to a previous question by Co-Chair
Meyer, related that the cost of in-state care per day was
$110.08 until December 31, and now it is at $107.42 per day.
2:38:27 PM
DEPARTMENT OF COMMERCE
Section 2(a) - Power Cost Equalization and Rural Electric
Capitalization Fund
Capitalization of the Power Cost Equalization Fund to
fully fund program. $5459.9 GF
Section 2(b) - Alaska Energy Authority (AEA) Power Cost
Equalization
Full funding of the Power Cost Equalization (PCE)
program. $5817.9 PCE Fund
SARAH FISHER-GOAD, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY, reference a spreadsheet, "Power Cost Equalization
Funding and Pro Rata Levels". (copy on file) She explained
that the requested funding would allow AEA to pay PCE at
approximately 99 percent of the full-funding level for FY
06. The second column shows the current funding level of
$18.700.0 and the estimated average pro rata level. The
average pro rata level will be 75 percent for FY 06.
Currently, the pro rata level is at 78 percent, and 66
percent is expected in March. The remaining columns show
the history of PCE funding.
2:41:22 PM
DEPARTMENT OF ENVIRONMENTAL CONSERVATION
Section 4(2) - DEC Buildings Maintenance and Operations
Annualizes fuel and utilities costs for new
Environmental Health Lab. The original fiscal note for
construction of the Environmental Health Laboratory
included estimates for out year operating costs.
Changes have occurred since the fiscal note was first
prepared in FY 02 in both the cost of utilities (fuel
and electricity), and the amount of energy consumed by
technologies employed in the laboratory. $98.8 GF
KRISTIN RYAN, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, explained the
increased costs to heat the new Environmental Health
Laboratory.
2:43:36 PM
DEPARTMENT OF HEALTH AND SOCIAL SERVICES
Section 4(3)(A) - Alaska Psychiatric Institute
Fuel Cost Increase $89.0 GF
Section 4(3)(D) - Pioneer Home
Fuel Cost Increase $308.0 GF
Section 4(3)(E) - Probation Services
Fuel Cost Increase $176.8 GF
Section 4(3)(F) - Public Health Laboratories
Fuel Cost Increase $55.1 GF
LAURA BAKER, BUDGET CHIEF, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided
an introduction to the Department Health and Social
Services' fuel increase estimates in 24-hour facilities. A
28 percent fuel cost increase is projected for FY 06. Ms.
Baker listed the cost by facility.
2:45:10 PM
Responding to a question by Co-Chair Meyer, Ms. Baker
clarified that the nursing fuel increase and state facility
rent costs are calculations provided by the Department of
Administration and are for state-leased buildings.
Section 4(3)(B) - Energy Assistance Program
Adds state funds to the federal Low Income Home Energy
Assistance Program (LIHEAP). Application period runs
from September 1, 2005 - April 30, 2006 and are 18
percent higher than last year at this time (department
had projected a 1.6 percent increase). $8,800.0 GF
Ms. Baker went on to discuss LIHEAP, a federal program which
provides heating fuel assistance for families demonstrating
need. She noted that fuel costs in the state had increased
by 90 percent in the past two years. She informed the
committee that a portion of the appropriation would be
directed toward the state LIHEAP program and another portion
toward a Native LIHEAP program.
Representative Foster asked about the actual poverty level
in Alaska. Ms. Baker clarified that for a family of four,
$36,000 would represent 150 percent poverty level.
Co-Chair Meyer requested information about the formula for
federal funding. Ms. Baker responded that LIHEAP is 100
percent federally funded at $11.3 million. The state LIHEAP
program receives $7.8 million and $3.4 million goes to
tribal providers. She also responded that there was no
funding in the budget for the following year.
Co-Chair Meyer observed that the amount seemed significantly
high.
Representative Joule commented that in Kotzebue the elderly
were surveyed regarding their heating needs. The survey
revealed that their heating systems were very old, and they
could not afford to purchase more than 55 gallons of fuel at
a time. He also noted that in addition to those who don't
meet the poverty standard, there are those who also need
assistance.
2:51:02 PM
Representative Hawker asked why the 24-hour facilities
operated statewide are not asking for supplemental
appropriations. Ms. Baker replied that those facilities
that traditionally have concerns were looked at. She also
clarified that juvenile justice systems are included in
probation services.
Responding to a question by Representative Hawker regarding
full funding for juvenile justice systems, Ms. Baker said
she would need to follow up on the question.
Representative Hawker observed that the Department of Health
and Social Services has a $1.8 billion dollar budget and yet
is still asking for supplemental appropriations. He
suggested that there was not enough effort to conserve.
Co-Chair Chenault referred to the total of $1.23 million
requested by the Department. He recalled that legislators
had requested initial numbers for 2005/06, which he stated
were estimated at $365,800. He asked for the reason for
this discrepancy between the OMB fuel costs.
2:54:37 PM
Ms. Baker referred to the cost comparison, which did show a
17.8 percent increase. She clarified that the cost analysis
of electricity, natural gas, propane, and heating oil,
actually totals a 20.7 percent increase. If only 24-hour
facilities are considered, it comes out to a 28 percent
increase based on a 17 percent increase the prior year, and
26 percent this year. She noted that the legislature had
funded a supplemental increase last year.
2:55:53 PM
MILITARY AND VETERANS AFFAIRS
Section 4(4)(A) - Army Guard Facilities Maintenance
Fuel and Utility Increases
$684.6 GF and $7.8 Inter-Agency
Receipts
Section 4(4)(B) - Air Guard Facilities Maintenance
Fuel and Utility Increases $100 GF, $300 FF
Section 4(4)(C) - Alaska Military Youth Academy
Fuel and Utility Increases $32.2 GF
JOHN CRAMER, DIRECTOR, ADMINISTRATION SERVICES DIVISION,
MILITARY AND VETERANS AFFAIRS, noted that the first request
is for 216 Army Guard facilities with utilities, most in
rural locations. He explained that the second request is
for 50 Air National Guard facilities for heating costs and
utilities. The third request is for 23 Alaska Military
Youth Academy facilities. He noted that the request
represents a 33 percent increase.
Co-Chair Chenault again compared the OMB summary to the
agency request, which varied by $700,000. He noted that
percentages were different from agency to agency and needed
further attention.
2:59:39 PM
DEPARTMENT OF NATURAL RESOURCES
Section 4(5) - Parks Management
Fuel and Utility Increases $92.0 GF
NICO BUS, ACTING DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, requested $92,000
of additional funding for Park facilities throughout the
state. He noted that Park facilities depend on fuel, and
the request represents a 30 percent increase in costs.
Other programs fall under Resource appropriations, but Parks
is in a unique and single appropriation, experiencing not
only energy problems, but also problems in collecting needed
revenues.
Representative Hawker asked what services would be reduced
if the funding were not approved.
Mr. Bus noted that a number of activities in the 121 Park
units would be minimized. He offered to go through a list
of these services with legislators. There are 397 buildings
to maintain with utilities.
3:02:28 PM
DEPARTMENT OF TRANSPORTATION
Section 4(6)(A) - Central Region Facilities
Heating Oil and Electricity Price Increase $433.8 GF
Section 4(6)(B) - Northern Region Facilities
Heating Oil and Electricity Price Increase
$469.2 GF, $155.1 Inter-Agency Receipts
Section 4(6)(C) - Central Region Highways and Aviation
Diesel Fuel and Gasoline Price Increase $806.9 GF
Section 4(6)(D) - Northern Region Highways and Aviation
Diesel Fuel, Heating Oil, and Electricity Price
Increase $768.8 GF
Section 4(6)(E) - Southeast Region Highways and Aviation
Diesel Fuel and Gasoline Price Increase $75.0 GF
Section 4(6)(F) - Anchorage International Airport Facilities
Electricity, Natural Gas/Propane Price Increase
$555.9 International Airports Revenue Fund
Section 4(6)(G) - Anchorage International Airport Field and
Equipment Maintenance
Utility and Equipment Fuel Price Increase
$186.6 International Airports Revenue Fund
Section 4(6)(H) - Marine Vessel Operations
Fuel Price and Usage Increase $14,774.9 GF
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES spoke to
Section 4(6), a requested increase for utilities and
equipment fuel. She explained that (A) and (B) are for
Central and Northern Region facilities components,
responsible for maintaining 600 to 700 buildings with
increased heating fuel, electricity, water, and sewer costs.
Ms. Slagle referred to (C) and (D), specific to equipment
fuel needed for heavy and light duty equipment used to
maintain road systems. She predicted approximately $2.65
per gallon, averaging prices from various areas statewide.
She noted that prices were different in the northern and
central regions.
Ms. Slagle referred to (F) and (G) which pertain to the Ted
Stevens Airport. She noted that they were anticipating an
increase of 20 percent for electricity, natural gas, and
equipment fuel.
Ms. Slagle noted that (H) is the largest request, which
would cover the increased cost of fuel for marine vessel
operations.
ROBIN TAYLOR, DEPUTY DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, stated
that the Marine Highway replacement fund has been exhausted
and stressed that the current appropriation was time
critical.
3:09:28 PM
Section 8(a) - Capital - Congressional Earmarks
Increase Congressional Earmarks appropriation of
$69,469.6 by $9 million Federal funds to $78,469.6 for
the Ketchikan: Shipyard Improvements project allocation
below. $0.0 GF
Section 8(b) - Capital - Ketchikan: Shipyard Improvements
New ship lift to accommodate construction of
Expeditionary Craft (E-Craft) for the Office of Naval
Research (ONR), a $30.0 million contract. DOT's
proposed FY 07 capital budget includes $42.5 million in
Federal funds, but $9.0 million is required earlier for
March 2006 construction bid (FY 07 capital budget will
be amended to reduce by the $9.0 million). This is a
SAFETEA-LU Earmark.
Ms. Slagle went on to describe Section 8 as a
reauthorization bill for work on the Ketchikan shipyard.
She explained that the shipyard needed a ship lift in order
to meet a deadline to build a $30 million vessel. She
stated that bids would be awarded in March, in order to
advertise for the project. She also stressed that the
funding was time critical.
Representative Hawker asked if this was part of federal
highway appropriations. Ms. Slagle noted that this project
existed outside of the regular entitlement program. She
stated that she would follow up with Representative Hawker
on whether it had been earmarked for this purpose.
3:12:20 PM
OFFICE OF THE GOVERNOR
Section 6(a) - Executive Office
Work related to the state gas pipeline and to bringing
North Slope natural gas to market for FY 06 and FY 07.
$1,000.0 GF
LINDA PEREZ, ADMINISTRATIVE DIRECTOR, OFFICE OF THE
GOVERNOR, explained that the request covers costs for
travel, consultants, staff resources, and negotiation
meetings. This request was amended on 2/6/06 to reduce the
amount from $1 million to $500,000 and deleting the FY 07
lapse date.
Representative Stoltze asked if the use of the governor's
jet was paid for from these funds. Ms. Perez stated that
was not the case.
3:13:55 PM
UNIVERSITY
Section 4(7)(A-O) - Various Campuses
Fuel and Utility Increases $2,800.0 GF
PAT PITNEY, ASSOCIATE VICE PRESIDENT, UNIVERSITY OF ALASKA
SOUTHEAST, stated that the University request was directly
related to fuel cost increases. She noted that these costs
of $2.8 million were not funded in the previous year's
budget.
Ms. Pitney referred to a comparison between actual and
projected costs. She related that there was a 2.8 percent
increase, and emphasized that January might prove more
expensive due to cold weather. Ms. Pitney noted constant
energy efficiencies, such as turning the heat down when not
needed.
Co-Chair Chenault pointed out a typographical error stating
a $22 million increase.
3:16:52 PM
COURT SYSTEM
Section 4(8) - Trial Courts
Fuel Cost Increase $87.1 GF
DOUG WOOLIVER, ADMINISTRATIVE ATTORNEY, ALASKA COURT SYSTEM
referred to the request of $87.1 for energy cost increases,
most of which come from the Anchorage, Palmer, and Fairbanks
facilities.
3:18:06 PM
DEPARTMENT OF LAW
Section 6(b) - Oil, Gas, and Mining
Will exhaust FY 06 funding by March 2006. Anticipate
expenditures of $3.9 million for the remainder of FY 06
and $1.5 million in FY 07. Funds for actual pipeline
negotiations and other oil and gas projects (Federal
Energy Regulatory Commission (FERC), Exxon Royalties).
$5,400.0 GF
LARRY OSTROVSKY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, noted in regard to prospective royalty litigation,
there was a long history of such disputes, predominantly
handled in house. He pointed out that if the issues at
stake are significant, royalty owners use outside counsel.
He explained that although many staff were knowledgeable in
these areas, it would be inefficient to litigate these cases
in house. He related current and past cases and their
outcomes.
Mr. Ostrovsky addressed tariff matter cases and the need for
outside counsel. He related a current case regarding
interstate and intrastate tariffs.
Mr. Ostrovsky spoke of two outside contractors hired for gas
line negotiations. Outside contractors are used for gas
line negotiations because instate firms lack experience in
this area. He compared the gas pipeline negotiations to
creating an "Alyeska" to ship gas, a complex undertaking.
He detailed many of the issues involved. He stressed the
importance of hiring expert legal counsel to ensure good
value for money spent.
3:29:28 PM
Representative Kelly asked how contracts with firms are
managed. Mr. Ostrovsky replied that parameters are
established before going into the process.
Representative Hawker asked why $1.5 million for FY 07 is
included in this supplemental request. Mr. Ostrovsky
deferred to Ms. Daughhetee.
KATHRYN DAUGHHETEE, DIRECTOR, ADMINISTRATIVE SERVICES
DIVISION, DEPARTMENT OF LAW, explained that it involved
looking at a need for money for the gas pipeline project,
which has not been included in a capital request or in the
operating base for the first six months of FY 07. The
estimate for FY 06 and FY 07 are bundled together.
3:32:59 PM
DEPARTMENT OF FISH AND GAME
Amendments ADFG (A-F) dated 2/16/96
Increased fuel and utility costs $223.0 GF
TOM LAWSON, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT DEPARTMENT OF FISH AND
GAME, explained the reasoning behind the request for
$223,000 as submitted by amendments dated 2/16/06. The
budget is project-based and six months of data determined a
need for an increase in fuel and utility cost funding.
HB 369 was heard and HELD in Committee for further
consideration.
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