02/01/1994 10:10 AM Senate FIN

                                                                               
  SB 243 FOUR DAM POOL TRANSFER FUND                                           
                                                                               
  Co-chair Pearce  directed  that SB  243  be brought  on  for                 
  discussion and referenced Amendment No.  1 by Senator Sharp.                 
  She noted numerous questions surrounding ramifications of SB
  and 126, which  passed the  legislature last  year, the                 
  systems that  were effected by passage, and  how moneys flow                 
  in  and   out  of   established  funds.     Co-chair   Frank                 
  acknowledged need for a refresher course  on the issue.  Co-                 
  chair Pearce advised  that meetings would  be held with  the                 
  bill drafter, staff from the department, and the Legislative                 
  Finance Division, prior to proceeding with SB 243.                           
                                                                               
  BRUCE  GERAGHTY, Deputy Commissioner, Dept. of Community and                 
  Regional Affairs, came  before committee.   He concurred  in                 
  need for technical  adjustments as a  result of last  year's                 
  passage of SB 106 and 126.   The department has started work                 
  on adoption of regulations.   As that effort progresses, the                 
  department will work with the legislature to fix whatever is                 
  necessary.                                                                   
                                                                               
  Co-chair Frank voiced  his understanding that policy  issues                 
  relating to  transfer of energy  programs from the  Dept. of                 
  Commerce and Economic Development to  the Dept. of Community                 
  and  Regional Affairs  remain.    Mr. Geraghty  acknowledged                 
  problems surrounding movement of a quasi-independent  entity                 
  into a  line agency as  well as  a budgetary shift  from CIP                 
  receipts to general funds.                                                   
                                                                               
  Co-chair Frank  asked that  Legislative Finance Division  be                 
  asked to demonstrate how the transition was structured, what                 
  funds were used to support AEA's  budget, and how the effort                 
  will  be funded under  the Governor's  proposed budget.   He                 
  voiced  concern  regarding movement  from  a CIP-based  to a                 
  general fund budget.                                                         
                                                                               
  REMOND HENDERSON, Director,  Administrative Services,  Dept.                 
  of Community and  Regional Affairs, explained that  a policy                 
  decision was  made to  budget the "entire  operation of  the                 
  energy division  under general  funds."   There was  concern                 
  over the number of  positions that had been funded  with CIP                 
  receipts and  inability  to track  whether  or not  all  the                 
  positions were needed.  The Alaska Energy Authority did  not                 
  operate  like  a line  agency  in  terms of  how  it charged                 
  operations to CIP  receipts.  It  did not have RSAs  between                 
  the  operating  budget and  the capital  budget.   It direct                 
  charged individual positions to various funds, and there was                 
  no consistency  as  to how  that  happened.   Mr.  Henderson                 
                                                                               
                                                                               
  voiced  his  belief that  CIP receipts  could  be used  as a                 
  funding  source and appropriately  accounted for.   Co-chair                 
  Frank  said  that such  funding is  common  in the  Dept. of                 
  Transportation and Public Facilities  and other departments.                 
                                                                               
                                                                               
  Mr. Henderson sought assistance  in a situation he  said had                 
  only  recently  arisen.     He  explained  that   AIDEA  has                 
  identified  transition  costs  that  it  says it  would  not                 
  normally  have incurred  absent passage  of the  above-noted                 
  legislation.    What is  in  question  is whether  AIDEA  is                 
  entitled  to any of  the funds  that were  appropriated last                 
  year,  either  through normal  operations--the  $8.4 million                 
  that was appropriated--or the $3.9  million in general funds                 
  that was appropriated for the  transition.  Until that issue                 
  is  resolved,  it  would  be  difficult  for  the  Dept.  of                 
  Community   and  Regional   Affairs  to   split  the   power                 
  development  revolving loan  fund.   The  department  sought                 
  guidance  from the  Office of  Management and  Budget.   OMB                 
  suggested  that  the matter  represents  an internal  policy                 
  decision.    Concern  remains  regarding  whether  AIDEA  is                 
  legally entitled  to the  funds.   Mr.  Henderson said  that                 
  guidance  from   the  legislature  or   Legislative  Finance                 
  Division would assist in transfer of funds into the four dam                 
  pool.    Co-chair  Pearce  suggested  that  the  Legislative                 
  Auditor, director  of the  Legislative Finance  Division and                 
  director of Legal  Services work with the department  on the                 
  issue.                                                                       
                                                                               
  Senator Kerttula voiced concern regarding whether allocation                 
  of positions  to the  newly  created division  of energy  is                 
  adequate for proper function.                                                
                                                                               
  Co-chair  Pearce  asked   that  Mike  Greany,   Director  of                 
  Legislative  Finance  Division, coordinate  an informational                 
  presentation to committee                                                    
                                                                               
  RANDY  WELKER, Legislative  Auditor,  advised  of a  pending                 
  request to the  Legislative Budget and Audit  Committee that                 
  Legislative Audit "go in, basically, and look at the breakup                 
  of the  energy authority  and how  those  programs ended  up                 
  where they did."  While it is not anticipated that that work                 
  will be completed  before the end  of the session,  concerns                 
  being raised at the present meeting could be worked into the                 
  scope of that  review.  Independent review  should highlight                 
  areas  of  weakness  that  could  be  brought  back  to  the                 
  legislature next session.                                                    
                                                                               
  Co-chair  Frank  voiced  need  for  as much  information  as                 
  possible in order  to properly prepare the  upcoming budget.                 
  Senator Kerttula concurred.   He voiced his  belief that the                 
  legislature destroyed an entity that was functioning, albeit                 
  perhaps not that well, and replaced it with one that may not                 
  function at all in terms of services to the public.                          
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:00 a.m.