Legislature(1997 - 1998)
01/28/1998 09:09 AM Senate FIN
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* first hearing in first committee of referral
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SENATE BILL NO. 231
"An Act making and amending capital appropriations and
reappropriations and capitalizing funds; and providing
for an effective date."
FY 99 CAPITAL BUDGET OVERVIEW
PRESENTED BY
OFFICE OF MANAGEMENT AND BUDGET
Upon calling the meeting to order, Co-Chair Sharp announced
that the FY99 Capital Budget Packets in front of the members
are also available on the internet and will be updated
throughout the legislative session.
Co-Chair Sharp introduced ANNALEE MCCONNELL, Director of the
Office of Management and Budget who was invited by the
committee to give an overview on the Governor's FY99 Capital
budget.
Ms. McConnell started her presentation by noting two bills
before the committee, SB 230 and SB 231, the Governor's
Appropriation proposals. She noted that this year there
will be no department by department overview and that
department representatives will be coming before the
committee in the coming weeks to address specific funding
requests.
She stated that the Knowles Administration proposes to
emphasize capital projects this year. Some included
projects are school maintenance, new prison construction,
and $16 million to be invested in economic development.
The governor has introduced a bill this morning addressing
NEW PRISON CONSTRUCTION. Senator Torgerson asked if the
project is to be funded by treasury bonds. He was informed
that it would be funded by a lease finance program.
Funding for SCHOOL PROJECTS will come from the Tobacco Tax.
Revenues from this tax have not yet been included in the
packet due to the inability to accurately project future
receipts. This is due to a certain amount of stockpiling of
tobacco products by consumers before the tax took effect.
OMB anticipates this event resulted in fewer taxes being
paid during the first quarter of the program, but that the
income generated will level out once stockpiles are depleted
which will enable them to better project future revenues.
The committee requested it be provided with the actual
figures collected in this first quarter and upcoming
quarters, as they become available.
Co-Chair Sharp asked if the FY99 proposed budget included
any NEW SCHOOL CONSTRUCTION. Ms. McConnell informed him
that there were no plans in this packet, although she
anticipated new building projects in the coming years.
There had been some concern over the potential uncertainty
of the bond market's reception of the use of the new Tobacco
Tax as a funding source. Updated information shows a
positive reception and the COP ratings continue to be very
good. She pointed out that in the past few years there has
been very little new school construction except in urban
areas with a strong tax base. The administration plans
future new school projects both in rural and urban areas.
She drew attention to the growing population in the Mat-Su
region that is suffering from widespread school
overcrowding.
Ms. McConnell spoke of a planned investment of a $16 million
dividend into economic development. This dividend money is
to go towards stimulating jobs.
Other proposed ECONOMIC DEVELOPMENT PROJECTS include the
following: an airborne geo-physical institute; encouragement
for value-added timber products; a partnership with the
Alaska Native Heritage Center in Anchorage; and fisheries
development.
Senator Adams asked if the proposed $50 million operating
budget incorporated remaining funding for economic
development. Ms. McConnell explained that some of the
funding is included in the Mental Health Program proposed
budget.
She went on to say that the outlines would not include STIP
as her office is first waiting for federal approval to be
secured. She said they did put in "place holders" for the
anticipated dollars, but referred to the cumbersome process
of continually amending past budget proposals as the reason
for omitting them in this year's packet. A final STIP will
be provided once it is received from the federal government.
Health and safety was the motivating factor for another
group of capital projects Ms. McConnell outlined. She
indicated that, when choosing which projects to include in
this portion, an emphasis was placed on the areas with the
most critical needs. Some of these projects are listed
below.
The Knowles Administration has proposed funding be spent on
renovations to PIONEERS HOMES. These renovations would
allow more beds to be converted to accompany patients
requiring additional care.
Funding is being requested for SEWER AND WATER PROJECTS
across the state. Ms. McConnell acknowledged that they were
requesting more money this year than last. She cited the
intention of the governor to "permanently relocate honey
buckets to museums" as the primary reason. The committee
had some discussion on this issue.
UNDERGROUND AND ABOVEGROUND STORAGE TANK REPLACEMENTS also
need funding according to the governor's proposal. However,
most of the money for these projects comes from federal
sources with the state needing to only contribute a small
percentage.
Ms. McConnell talked about funding for EMERGENCY MEDICAL
SERVICES and upgrades to VITAL STATISTICS that would allow
for better tracking of the health care needs of Alaskans.
EMERGENCY COMMUNICATIONS improvements will contribute to the
health and also the safety of Alaskans have also been
included in this capital budget packet.
The Knowles Administration is also requesting funding for
the ALASKA STATE TROOPERS and FISH AND WILDLIFE PROTECTION.
This money will be used to beef up equipment used by
officers in the line of duty. Specifically mentioned were
snowmachine upgrades. There are also plans to expand the AK
State Trooper Academy and construct adequate housing for the
recruits while attending the school.
Ms. McConnell talked about funding needs for TRANSPORTATION
and told the committee they can expect be updated on federal
funding amounts as they are awarded to the state. GATEWAY
ALASKA projects undertaken in recent years, such as
expansion to the Anchorage and Fairbanks airports, are
proving to be viable to the economy, she pointed out.
She said that while the executive and legislative branches
together were making a dent in TECHNOLOGY ADVANCEMENTS
across the state, there is still great need for improvement.
The proposed budget includes more funds to help meet these
goals.
Co-Chair Sharp noted that while in the past, matching
federal funds was relatively easy for the state, the budget
is much tighter now and more attention will need to be paid
the feasibility of specific projects.
Senator Pearce inquired about port projects. Ms. McConnell
told her they are not included in the executive branch
budget.
Senator Pearce asked if the Knowles Administration had
outlined a policy on matching municipal grants. Ms.
McConnell replied that although they had given it some
consideration, it was felt that there were areas that needed
additional funding to maintain. This comes at a time when
the governor is trying to hold the line on spending so these
potential projects have been left out.
On the subject of DEFERRED MAINTENANCE, Ms. McConnell
informed the committee that while the administration has
targeted critical deferred maintenance projects for each
department, they feel focus on school projects is most
important at this time. She said the departments will be
presenting some of these individual needs to the committee
as the session progresses. Some of the funding for the
school projects will come from the Tobacco Tax revenues.
Seven million dollars is earmarked for University of Alaska
deferred maintenance projects.
Future budget proposals, starting with FY00, will
incorporate annual and preventative maintenance costs.
These will also detail a rent structure where agencies will
be charged rent to cover preventative maintenance costs.
This will be made possible due in part to the new automated
budget system.
Senator Adams had questions on the EXXON VALDEZ OIL SPILL
TRUSTEE COUNCIL. He wanted to have a history of what
purchases they have made in the past five or six years and a
list of planned purchases. He referred to acquisition of
land. Ms. McConnell said her office has been working with
them and will continue to request this information for the
committee.
Ms. McConnell concluded her presentation by introducing some
of the OMB staff who have been working on the proposed FY99
capital budget and encouraging committee members to contact
them with questions and suggestions for making the packet
more user friendly for their needs. These staff members are
Dan Spencer, Joan Brown and Christine Meholic.
Co-Chair Sharp predicted that it would be a bumpy road ahead
for this proposed budget. He commented that the funding
requested was above the majorities' general fund target.
After general comments by committee members, Co-Chair Sharp
thanked Ms. McConnell for her presentation.
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