Legislature(2015 - 2016)SENATE FINANCE 532
04/09/2015 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB56 | |
| SCR1 | |
| SJR2 | |
| SB22 | |
| SB26 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 56 | TELECONFERENCED | |
| += | SCR 1 | TELECONFERENCED | |
| += | SJR 2 | TELECONFERENCED | |
| + | SB 22 | TELECONFERENCED | |
| SB 50 | |||
| = | SB 26 | ||
SENATE BILL NO. 26
"An Act making appropriations, including capital
appropriations and other appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
8:51:19 PM
Vice-Chair Micciche MOVED to ADOPT the committee substitute
for SB 26, Work Draft 29-GS1781\I (Martin, 4/9/15). Co-
Chair MacKinnon OBJECTED for discussion.
LAURA PIERRE, STAFF, SENATOR ANNA MACKINNON, explained the
difference between the proposed committee substitute (CS)
and the previous version of the bill, detailing that the
committee cut the governor's proposed capital budget by $40
million for a total capital budget of $1,500,829,300. She
specified that the budget was broken into an Unrestricted
General Fund (UGF) total of $108,318,036, a Designated
General Fund (DGF) total of $56,325,100, an "Other" fund
total of $61,233,800, and $1,274,952,400 in Federal
Receipts.
Ms. Pierre discussed the changes reflected in the CS. The
new bill consolidated the allocations for the Municipal
Harbor Facility Grant Fund, which would give the Department
of Transportation and Public Facilities (DOT) more
flexibility in how it could disperse the funds to
municipalities and complete projects. She continued that
the new bill funded the Alaska Donor Services Program for
operational costs in the amount of $75,000; and in order
for the program to access the funds an allocation in the
capital budget was required. The bill added a
reappropriation of legislative appropriations in the amount
of $211,000 for the Senate Special Committee on the Arctic,
for work to be conducted during the 29th Alaska State
Legislature. Additionally, reappropriations were added to
the Alaska Housing Capital Corporation (AHCC) account,
brought forward by members who were lapsing.
Ms. Pierre continued that a $45 million fund transfer was
removed from the Alaska Capital Income Fund to the AHCC
account. As a result, $43,237,400 was added to the School
Construction Grant Fund to build a new school for Kivalina
per the consent decree and settlement agreement from the
Kasayulie lawsuit [a 2011 settlement for the 1997 case of
Kasayulie vs. State of Alaska pertaining to equity in
education].
8:54:38 PM
Ms. Pierre specifically thanked Hilary Martin from the
Legislative Legal Department and staff from the Legislative
Finance Division.
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
further OBJECTION, it was so ordered.
Co-Chair MacKinnon MOVED to ADOPT Amendment 1, 29-
GS1781/I.1, Martin, 4/9/15 (copy on file):
Page 33, following line 18:
Insert a new subsection to read:
"(e) The amount necessary for Dalton Highway disaster
emergency repairs, not to exceed $5,000,000, is
appropriated from the general fund to the Department
of Transportation and Public Facilities for that
purpose."
Vice-Chair Micciche OBJECTED for discussion.
Co-Chair MacKinnon explained that the amendment had been
brought to the committee by the administration. She
mentioned that there was an emergency happening on the
Dalton Highway.
8:56:01 PM
PAT PITNEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, explained Amendment 1. She stated
that on March 13, 2015; there was an ice jam on the Sag
River (mile 390 to 410 of the Dalton Highway near
Deadhorse) which created an ice floe/flood over the road
and stopped traffic. The road had been closed for some time
and when open was limited to one lane of traffic. She
recounted that she had shared photos of the ice jam and
highway blockage with Co-Chair MacKinnon's office earlier
in the day. She related the DOT Commissioner Marc Luiken
was on site, and highlighted the importance of getting the
road open. She continued that industry members had been
working closely with state personnel to provide contractors
to help clear the road. The previous day there was a
disaster declaration for the flooding on the road, which
put the state into a faster procurement role. She furthered
that the amendment would provide up to $5 million to
continue to mitigate flooding and keep traffic passing
through the area.
Vice-Chair Micciche wondered if there was any potential for
federal aid to offset the costs of cleanup and repairs. Ms.
Pitney replied that she was optimistic that the federal
government would offer financial aid based on the state's
disaster declaration. She related that the Federal Highway
Administration (FHWA) would be coming to assess the
flooding to determine whether it fit within the rules for
federal response. She specified that if criteria were met,
some of the federal response would be funded at 100
percent, and other work would be funded at the 90 - 10
federal rate. There were items that would not qualify for
federal response, however the administration was
"cautiously optimistic" that there would be some federal
aid. She reiterated the importance of getting the road
open, and estimated that at a minimum the state would be
responsible for $700,000 in up-front costs. She explained
that until the threshold was passed, there would be no
sharing of costs.
8:59:19 PM
AT EASE
8:59:44 PM
RECONVENED
Vice-Chair Micciche wondered if the funds in the amendment
were only a contingency, and the state would not end up
using the $5 million being requested. Ms. Pitney replied
that there would be a minimum of $700,000 used. She agreed
to share Commissioner Luiken's eyewitness account of with
Vice-Chair Micciche after the meeting; and related that the
commissioner was optimistic there would be federal funding.
She related that the commissioner had been amazed by the
size and amount of ice.
Co-Chair MacKinnon wondered if there was any comment from
DOT/PF with regard to use of the funds, and perhaps
assurance as to how they would be used.
MARY SIROKY, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, shared
that DOT had officially notified FHWA of the intent to seek
emergency response funding. The department had various
conversations with regional federal representatives, and
she thought there had also been conversations at a higher
level. She shared that the department was optimistic that
FHWA would participate in the disaster relief efforts. She
discussed the concern over what the FHWA would consider
"fundable" and what the state considered necessary to get
the road open. She remarked that there may be more severe
infrastructure damage to the road, once the flooding was
under control and ice was removed.
Ms. Siroky continued that the department had a plan in
place, had contractors on site, and hoped to have at least
one lane open by the following day.
9:02:39 PM
Senator Olson wondered if any occurrences of the same
magnitude had happened in the area in the past. Ms. Siroky
replied that there had never been anything of the same
magnitude before. She described photos of the site as
amazing, and stated that it was impossible to discern where
the overflow ice started and ended. She reiterated that
Commissioner Luiken had been astounded at the sight.
Senator Olson asked if there were plans in place to prevent
a recurrence. Ms. Siroky replied that there were already
two projects for raising the roadbed on the Dalton Highway
that were already in the funding queue. She added that the
projects were anticipated to start the following summer.
9:04:00 PM
Co-Chair MacKinnon WITHDREW her OBJECTION to Amendment 1.
There being NO further OBJECTION, Amendment 1 was ADOPTED.
Senator Olson MOVED to ADOPT Amendment 2 (copy on file).
Co-Chair MacKinnon OBJECTED for discussion.
Senator Olson explained the amendment, which would fund the
Kivalina road at $2.5 million. He remarked that there was
funding in the budget for the Kivalina school for
approximately $43 million, but a road was needed before the
school could be built. He remarked that there were several
estimates on the cost for the road. The $2.5 million in the
amendment would provide seed money in order to try and
secure federal funding from the Bureau of Indian Affairs
(BIA), Indian Reservation Roads Program (IRR). He commented
that the governor was in support of the amendment. He and
pointed out that the amendment in no way obligated the
state to fund the remainder of the road, and referred to a
relevant memo from the Division of Legal and Research
Services dated April 9, 2015 (copy on file).
Senator Dunleavy also objected to the amendment. He
remarked that there were various issues with moving the
amendment forward. He did not think the state should get
involved in building a road that may lead to later
obligations of moving the town of Kivalina [as erosion
would necessitate]. He did not feel that the state should
take on the construction of the road.
Co-Chair MacKinnon handed the gavel to Vice-Chair Micciche.
9:06:53 PM
AT EASE
9:07:19 PM
RECONVENED
Co-Chair MacKinnon shared that the committee was currently
reviewing several pieces of correspondence from Department
of Education and Early Development (DEED) Commissioner
Michael Hanley regarding the litigation associated with the
Kivalina school, and did not believe that the road was part
of the resultant Kasayulie settlement.
Senator Dunleavy MAINTAINED his OBJECTION.
Senator Olson shared that the amendment had been an element
of concern due to costs associated with the road. He
discussed the Kasayulie settlement, and recognized the need
for the road. He referred back to the letter from the legal
department that indicated that the state was not
necessarily liable for its construction. He asked for
support of the amendment.
A roll call vote was taken on the motion to adopt Amendment
2.
IN FAVOR: Olson
OPPOSED: Kelly, Bishop, Dunleavy, Hoffman, Micciche,
MacKinnon
The MOTION FAILED (6/1).
Senator Dunleavy MOVED to ADOPT Conceptual Amendment 3. He
described the amendment as legislative intent regarding the
Kivalina School:
a. The legislature declines to fund the Kivalina K-12
School renovation/addition under the 2011 consent
decree and settlement agreement in Kasayulie vs. State
(3AN-97-3782CIV September 1st, 1999) because of
concerns about erosion and viability of the school
site.
b. The legislature declines to fund a Kivalina
replacement school at the new school site because of
concerns about erosion and viability of the new school
site.
c. The settlement terms of the January 7, 2015 letter
from the Citizens for the Educational Advancement of
Alaska's Children are unacceptable to the legislature.
Senator Dunleavy explained that the amendment would remove
the funding for the Kivalina School project. He argued that
the decree specifically provided for the legislature to
decline funding which would not trigger a reopening of the
case. The amendment also put the findings on permanent
record as to avoid future misunderstanding.
9:11:00 PM
AT EASE
9:11:42 PM
RECONVENED
Co-Chair MacKinnon brought up the aforementioned legal memo
pertaining to the Kivalina School construction, and shared
that she would speak in opposition to Conceptual Amendment
3 based on advice from the Attorney General's office, as
well as the memo. It was her belief that the state was
responsible for some amount of money to Kivalina, although
the matter was still in dispute and not final as to whether
the project should be a renovation (for much less funds) or
a new school entirely.
Senator Olson referred to the consent decree and stated
there was strong evidence that it was not up to the
legislature to fund or not fund; rather, the funding had
been mandated and therefore he wondered about the validity
of the conceptual amendment to withstand legal challenge.
9:13:32 PM
AT EASE
9:17:28 PM
RECONVENED
Vice-Chair Micciche queried what conditions were on the
previously appropriated funds for the Kivalina School. Co-
Chair MacKinnon replied that there was a direct
appropriation for the Kivalina School in compliance with
the settlement.
Ms. Pierre announced that the appropriation was to the
School Construction Fund, and would lapse after five years
if unspent (like any other capital project).
9:19:00 PM
Senator Dunleavy directed the committee's attention to page
1, second paragraph of the memo. He read the passage:
Note, as a preliminary matter, that the consent decree
specifically provides that the parties cannot bind the
legislature.
Senator Dunleavy pointed out the words "legislature" and
"state", and reminded the committee that the legislature
was the fiduciary or funding arm of state government.
Senator Dunleavy directed the committee's attention to page
2, first paragraph of the memo. He read the passage:
(Consent decree, p. 6.) The consent decree is slightly
ambiguous in this regard…
Senator Dunleavy remarked that he was attempting to clear
up any ambiguity, so that the legislature (as opposed to
the state) was not liable for future obligations toward the
"whole Kivalina concept."
9:20:49 PM
Senator Dunleavy directed the committee's attention to page
2, second paragraph of the memo. He read the passage:
The consent decree requires that the state include the
"Kivalina K-12 school renovation/addition" in the
governor's proposed capital appropriations budget
bill. (Id.) The consent decree also provides that "if
the Legislature declines to fund, or places
contingencies on the Kivalina school project because
of concerns about erosion or viability of the school
site, the lack of funding or contingencies will have
no effect on the settlement, and cannot be used by
plaintiffs to reopen the litigation."
Senator Dunleavy stated there was an issue with the
terminology used in the memo, and considered the use of
"legislature" and "state" to be incorrectly differentiated.
He argued that the legislature was part of the state. He
suggested that the administration had put the legislature
in an obligation, to some degree, regarding the school. He
recognized that there was a legitimate issue in the
Northwest Arctic in the town of Kivalina. He pointed out
that the project had originally been a settlement on a
school to do a renovation on-site, starting with a cost $14
million. He expressed concern that the state inadvertently
would be responsible for a much larger obligation.
Senator Dunleavy referred back to the legal memo, and
pointed out that the document referred to "state" and
"legislature" and rarely mentioned "administration."
Senator Dunleavy directed the committee's attention to page
2, third paragraph of the memo. He read the passage:
Further, under the consent decree, the legislature can
decline to fund the Kivalina K-12 school project if it
has concerns about erosion or viability of the
existing school site.
Senator Dunleavy further explained Conceptual Amendment 3.
He reiterated that the purpose would be to remove the
school funding, and stated that he would not have objected
to funding the school and having the funds be put into
escrow or contingency funds that isolated the monies
specifically for the Kivalina School. He hoped the end
result was that the funding would remain school-focused
rather than being used for road or town site projects,
which he thought should be separate discussions. He thought
there were ambiguities (as the letter mentioned) and that
the legislature was singled out as not being obligated to
fund the school. He continued that there was discussion in
the memo implying that the state was obligated. He
reiterated that the purpose of the amendment was to isolate
the school funding to keep it designated only for the
particular school.
9:25:32 PM
AT EASE
9:26:00 PM
RECONVENED
Senator Dunleavy asked for the support of the committee for
Conceptual Amendment 3.
Co-Chair MacKinnon directed the committee's attention to
page 3, paragraph 4 of the legal memo. She read the
passage:
Failure to appropriate any funding does not, however,
resolve the state's constitutional obligations.
Co-Chair MacKinnon MAINTAINED her OJECTION.
A roll call vote was taken on the motion to adopt
Conceptual Amendment 3.
IN FAVOR: Dunleavy
OPPOSED: Olson, MacKinnon, Bishop, Hoffman, Micciche, Kelly
The MOTION FAILED (6/1).
9:27:09 PM
Senator Dunleavy offered Conceptual Amendment 4:
Any funds appropriated for this project shall be
placed in a joint escrow account to be spent only for
direct construction/design for a school structure
serving Kivalina. These funds shall automatically,
without further action by either party, be swept back
into the state general fund if construction is not yet
commenced prior to April, 2022.
Senator Dunleavy characterized the amendment as an attempt
to safeguard the public funds for the issue of the Kivalina
School. He reiterated that the idea was to focus solely on
funding the school rather than a road, relocation, or a new
site.
Co-Chair MacKinnon OBJECTED for discussion.
Co-Chair MacKinnon found the amendment to be "intriguing"
and thought that it had merit. She remarked that the
previous amendment also had merit for the purposes of
discussion and reducing the state's liability in a piece of
legislation and litigation that was before the legislature.
She expressed a commitment to working towards making sure
the children of Kivalina saw direct benefit from the
appropriation and allocation being considered for the
Kivalina School. She opposed the amendment and believed the
committee should work with the legislative legal department
to ensure there was compliance with the decree. She wanted
to review the relevant language and work with Senator
Olson.
Senator Olson inquired how Senator Dunleavy came up with a
construction commencement deadline of 2022.
9:29:40 PM
AT EASE
9:29:50 PM
RECONVENED
Senator Dunleavy explained that the date specified in the
amendment was an estimate based on seven consecutive
construction seasons.
Senator Dunleavy WITHDREW Conceptual Amendment 4. There
being NO OBJECTION, it was so ordered.
Senator Dunleavy MOVED Conceptual Amendment 5. He explained
that the amendment would remove all references to the
figure of $43,237,400 for the Kivalina School and replace
it with $14,724,714 [the original capital improvement
project (CIP) amount for major maintenance] adjusted for
present day value from July 1, 2012. He explained that the
amounts in question pertained to language in the decree on
the CIP list when the funds were earmarked for that date
for renovation of the school.
Co-Chair MacKinnon OBJECTED for discussion.
9:31:12 PM
Vice-Chair Micciche stated that he supported $43,237,400 in
school funding for Kivalina in order to prevent the state
from being at risk for litigation being reopened and
subsequently being responsible for the purchase of an
entire school at a much higher cost (nearing $100 million).
Vice-Chair Micciche referred to page 5 of the legal memo,
which discussed a limit to the state's liability. He
specified that the cost of the replacement school for
Kivalina was based off of the 2013 CIP process. He referred
to the second paragraph on page 5, and read the following
passage:
Because the consent decree specifically provides that
the amount of the appropriation would be determined
through the 2013 CIP process, the consent decree
places the risk of a project that exceeds the budget
on Kivalina. If the project exceeds the costs
estimated in the 2013 CIP, the state may not be
required to provide additional funding. If the
legislature takes this approach, the state will have
met its obligations and CEAAC would not have a strong
argument for reopening the litigation.
Vice-Chair Micciche reiterated his concern that the state
could be responsible for greatly increased costs if it did
not meet its responsibility to fund the school as planned.
Senator Olson agreed with Vice-Chair Micciche that there
was a possibility of litigation over the Kivalina School
being reopened. He respectfully asked Senator Dunleavy to
withdraw his amendment.
Senator Dunleavy expressed appreciation for Senator Olson's
words, but wanted the committee to vote on Conceptual
Amendment 5.
9:33:41 PM
Co-Chair MacKinnon expressed appreciation for an
opportunity to discuss the issue and the children of
Kivalina, who had waited for 15 years while the issue of
the school was debated. It was her view that the state
should meet its obligation to take care of the children and
students of Kivalina.
A roll call vote was taken on the motion to adopt
Conceptual Amendment 5.
IN FAVOR: Dunleavy
OPPOSED: Micciche, Olson, Kelly, Bishop, Hoffman, MacKinnon
The MOTION FAILED (6/1).
9:34:24 PM
Senator Dunleavy expressed appreciation for the discussion.
He agreed with Co-Chair MacKinnon that the children of
Kivalina deserved a school and a great education. He
reminded the committee that he had spent 13 years near
Kivalina, much of it as an educator and administrator. He
relayed that he had visited Kivalina on numerous occasions,
and looked forward to the fact that the children would be
getting a new school. He emphasized that he would like
continued discussion pertaining to constraining the funding
in some way so it did not morph into funding something
other than a school. He referred back to the legal memo,
and claimed it "betrays a weak link in our situation." He
opined that the state was responsible for things the
administration had agreed to, and for that reason he wanted
to pursue further discussion.
Co-Chair MacKinnon brought up the aforementioned letters
from DEED and concurred that the department had exceeded
its authority in some of the language that was used for the
Kivalina School appropriation.
Vice-Chair Micciche shared the concerns of Co-Chair
MacKinnon and Senator Dunleavy. He highlighted protecting
the state from additional expenses and possible reopening
of litigation over the Kivalina School.
9:37:28 PM
Co-Chair MacKinnon made a statement:
In 1999 Kasayulie vs. State a superior court found
that the legislature had not met its constitutional
obligations to maintain, by general law, a system of
public school open to all children of the state. In
response to the superior court order, and to meet the
state's obligation under the consent decree, we
entered in to resolve the litigation. The legislature
had previously provided appropriations for school
construction projects in Emmonak, Koliganek,
Nightmute, Kwethluk. Through the capital improvement
project grant program and passed legislation to
equalize funding for rural and municipal school
construction needs, in this budget the legislature is
appropriating $43,237,399 for school construction in
Kivalina. Kivalina is the last of the five-school
construction project the state agreed to request
funding for in the Kasayulie consent decree. By this
appropriation the state is providing rural schools
with the assurance of adequate facilities, funding
under the capital improvement project grant program
and meeting its constitutional obligations to
establish and maintain a system of public schools open
to all children in the state. With this appropriation,
the legislature intends to resolve the Kasayulie
litigation and further the goal of providing for equal
education opportunities and adequate facilities across
the state.
Vice-Chair Micciche MOVED to REPORT CSSB 26(FIN) out of
committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CSSB 26(FIN) was REPORTED out of committee with a "do pass"
recommendation.
9:39:53 PM
AT EASE
9:41:03 PM
RECONVENED
Senator Dunleavy thanked the committee for the discussion
and working hard on the budget. He referred back to the
Kivalina School, and foresaw the need for future discussion
about education and other items that were constitutionally
mandated by the state. He thought it was important to
ponder the different ways of doing education, and thought
it was possible to do it differently while providing a
quality education for all kids.
Senator Hoffman thanked Co-Chair MacKinnon and her staff
for providing leadership to continue to reduce the capital
budget. He stressed that many people in Alaska did not
fully comprehend the magnitude of the financial problems
the state was faced with. He recognized the needs of the
constituency, and the difficulty of trimming a budget
further than what the governor had proposed.
9:43:09 PM
Vice-Chair Micciche commended Co-Chair MacKinnon and the
co-chair of the operating budget for persevering in a
difficult and unpleasant process. He recognized the
pressure the co-chairs were under, and opined that Co-Chair
MacKinnon was consistent and fair.
Senator Bishop said "good job."
Co-Chair MacKinnon thanked the committee for their efforts.