Legislature(1999 - 2000)
03/18/1999 08:05 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 40-DEPT OF COMMUNITY & ECONOMIC DEVELOPMENT Number 0040 CO-CHAIRMAN HARRIS announced that the only order of business before the committee would be HOUSE BILL NO. 40, "An Act combining parts of the Department of Commerce and Economic Development and parts of the Department of Community and Regional Affairs by transferring some of their duties to a new Department of Commerce and Rural Development; transferring some of the duties of the Department of Commerce and Economic Development and the Department of Community and Regional Affairs to other existing agencies; eliminating the Department of Commerce and Economic Development and the Department of Community and Regional Affairs; relating to the Department of Commerce and Rural Development and the commissioner of commerce and rural development; adjusting the membership of certain multi- member bodies to reflect the transfer of duties among departments and the elimination of departments; creating the office of international trade and relating to its duties; and providing for an effective date." REPRESENTATIVE KOHRING, Sponsor of HB 40, asked the committee if Annalee McConnell could provide the committee with her testimony since she has a commitment at 8:30 a.m. ANNALEE MCCONNELL, Director, Office of Management & Budget, Office of the Governor, thanked Representative Kohring for accommodating her schedule. With regard to consolidations, Ms. McConnell stated that the governor views consolidations as a necessary part of the balanced budget plan. Everyone realizes that budget cuts have to be a part of that plan. Ms. McConnell said that consolidations could be a viable element of budget cuts if done properly. There have been consolidations in recent years between divisions within departments. She noted that there was consolidation between departments with the consolidation of the Division of Administrative Services between DNR and DMVA. Further, much is done on a more informal basis. MS. MCCONNELL stated that this would be the first time for a merging of activities between two or more departments. Prior legislation has focused, as does HB 40, on the Department of Commerce and Economic Development and the Department of Community and Regional Affairs. She pointed out that there have been several changes at the federal level with regard to job training funds. If review is given to the reconfiguration of services in order to provide economic development or work force development services to communities and businesses in a user-friendly fashion, those changes could become part of this equation. Ms. McConnell informed the committee that there has been review of the possibility of reconfiguration of the job functions which over time have been in a number of different departments. Some functions were placed in specific departments due to federal requirements. Number 0361 MS. MCCONNELL expressed the desire to work with the legislature, however she was not prepared to provide a specific plan at this point. Ms. McConnell believed it important to establish some clear goals at the beginning for this effort. She pointed out that community health and economic viability are critical to the overall health of Alaska and therefore should be strived for in this plan. The plan should also address the key issues for rural Alaska such as power cost equalization. The plan should make it easier for communities, businesses, and individuals seeking job training and employment to relate to available state services. Ms. McConnell indicated the possibility of integrating services provided by several departments in order to achieve one-stop shops for communities which would improve the economic health of that community. The plan should also maintain an emphasis on high unemployment areas. Ms. McConnell acknowledged that overall budget savings are critical during this time. Further, the reconfiguration of services must be done in a manner which actually improves services. Ms. McConnell cited the moving of the Division of Motor Vehicles to the Department of Administration as an example of reconfiguration creating improved services. Improving services is as important if not more important than budget savings because in the long-term such will either help or hinder the economic viability of Alaska's communities and the state as a whole. MS. MCCONNELL stated that she was not prepared to provide detailed discussion of HB 40. She informed the committee that in discussions with Representative Kohring, he had realized that it would be preferable from Ms. McConnell's standpoint to review all of the areas rather than the Administration speaking specifically to elements of HB 40. Number 0731 CO-CHAIRMAN HALCRO asked if the collapsing of these two departments would still protect the constitutional requirement for a local government affairs agency. MS. MCCONNELL recognized that the Alaska Constitution does require a local government affairs agency, but the constitution does not specify that the local government affairs agency be a separate department. She emphasized the importance of not making local government seem a lesser priority during discussions of this. CO-CHAIRMAN HALCRO agreed with Ms. McConnell's comments. He mentioned that he and Co-Chairman Harris had discussions with Representative Kohring regarding the protection of the feel of the DCRA and the rural and local governance aspect of the DCRA during the merging of the two departments. Co-Chairman Halcro said that Representative Kohring had assured him and Co-Chairman Harris that had been taken into consideration. REPRESENTATIVE DYSON inquired as to how money would be saved if the work load remains the same. He requested that Ms. McConnell speak to Representative Kohring's idea about reducing upper levels of management by spreading their responsibilities to others. Further, if the consolidation occurs would money be saved with regard to the amount of office space, equipment and facilities that are utilized. Number 0967 MS. MCCONNELL said that most people feel that large budget savings will not be the principle result of consolidation because in many areas all the services that could be or would be wise to provide are not provided. Therefore, as Representative Dyson mentioned, some of the resources saved by reducing upper management may be applied to other areas to fully satisfy the need. That approach should be reviewed. Ms. McConnell agreed that there could be some savings from reducing the number of managers in particular areas which has been reviewed in the job training arena. REPRESENTATIVE DYSON pointed out that Ms. McConnell had inferred and Representative Kohring had stated that cooperation of economic development may be enhanced. Representative Dyson felt it a worthy goal if the functions are consolidated under one roof. He inquired as to how long before savings could be realized. MS. MCCONNELL said that savings would be dependent in part on the type of changes being made. Perhaps, the plan would be a phased approach. Ms. McConnell indicated that her goal would be to make it easier for communities to know what resources are available. The key will be to retain the current diversity with a couple of departments because the large business sector approach would not necessarily be the appropriate approach for individual communities. REPRESENTATIVE DYSON informed the committee that he always tells urban business leaders they should hope that rural Alaska does well because virtually all the commodities that can be delivered to the world come from rural Alaska. Anchorage only exists because there is a creek where barges can be floated in during high tide in order to off-load things. REPRESENTATIVE DYSON noted that there are numerous programs in the U.S. that address job training issues. Would there ever be a point at which there would be a single point of contact in a community which could direct and facilitate the use of all of the available programs. Number 1350 MS. MCCONNELL stated, "We're certainly headed in that direction." There was a recent change in federal law which will make a difference in the ability of states to integrate their job training programs. She pointed to welfare reform and one-stop shops as an example of Alaska heading in the direction of a single contact point. Alaska is poised to take advantage of the federal changes. Ms. McConnell pointed out that the Human Resource Investment Council (HRIC), the umbrella organization which was created in many states to determine how to integrate, has done much of the leg work in this area. She reiterated that the change in the federal law will make it easier to integrate from this point on. REPRESENTATIVE DYSON asked if there was anything that could be done in state law to facilitate integration and even move to the next level, one-person contact points that would provide information regarding the federal, state, local and Native programs. Number 1500 REPRESENTATIVE JOULE reiterated Co-Chairman Halcro's previous concerns regarding maintaining the integrity of the local government affairs agency as required in the Alaska Constitution. He pointed out that the Alaska Constitution also says that the local government affairs agency is at the Executive Branch level. Under the current system, there is an advocate strictly for rural, municipal, and local government agencies. Representative Joule said, "And my worry is that if we're looking at consolidating with something like commerce, then you have somebody who has to make probably some hard choices when those--in those times, they may be few, but when they conflict between commerce and that development and those things in rural Alaska and in local government." Representative Joule wondered how Ms. McConnell foresaw such a scenario. He saw it as a watered-down roll in the constitution which would be further watered-down with the split of duties. MS. MCCONNELL recognized Representative Joule's concern as very legitimate. The Governor has insisted that regardless of the name of the department, every department needs to give attention to the needs of rural Alaska and how well those needs are being met. Therefore, it would become a fundamental part of every department's mission to look out for all parts of the state. Much of what has been done over the last four years has been to ensure that responsibilities to rural Alaska and children, for instance, are embedded in the thinking in each department. Such an approach is beneficial because then no matter the department each will have the responsibility to rural Alaska. Ms. McConnell acknowledged that such an approach depends upon having employees who take such responsibility seriously and do not simply abandon one choice in favor of the other. Unfortunately, not enough people in urban Alaska realize their existence is dependent upon the economic health and viability of rural areas. Number 1766 REPRESENTATIVE JOULE commented that consolidation is being considered in part because Alaska is faced with fiscal issues. He implied that the continued economic health of Alaska is dependent upon the resources in rural Alaska. Representative Joule pointed out the opposing perceptions of Alaska. One perception is that the state is looking toward the development of the resources of rural Alaska for the continued economic health of the state. Another perception is of diminished availability for rural people to access government whether through the legislature or departments. CO-CHAIRMAN HALCRO mentioned that he and Co-Chairman Harris talked with Commissioner Irwin early in the session regarding the goals of the Department of Community & Regional Affairs. One of the topics of discussion was the role of economic development in rural Alaska and how that would dove-tail with the Department of Commerce & Economic Development. During the discussion, Commissioner Irwin had the opinion, as stated by Co-Chairman Halcro, "...that unless somebody from London comes to one of my communities in Larson Bay, I don't consider what we do the same thing." Co-Chairman Halcro said that having people from the Department of Commerce & Economic Development promoting Alaska overseas in various industries seems to have one voice promoting Alaska on a broader wavelength. Casting the nets in a broader fashion may result in better interest than the results of isolated targeted efforts. MS. MCCONNELL stated that economic development is not a one size fits all plan. Therefore, attention must be given to the fact that some trade marketing would not be appropriate for rural Alaska. Ms. McConnell pointed out that, "...you don't go in and do economic development to someone in rural Alaska. It can't be that kind of process." Ms. McConnell said that Alaska cannot have an economic development entity that markets Alaska in the broad sense, but rather the marketing would have to be targeted and very specific requiring relationships with the community and its local government. Number 2137 REPRESENTATIVE KOHRING informed the committee that the concept of HB 40 was initiated three years ago by now Senator Pete Kelly. Senator Pete Kelly's bill has been modified to HB 40 as before the committee. With regard to the merger of the two departments, Representative Kohring emphasized that this merger is to make the programs more effective. He informed the committee that most of the length of HB 40 can be attributed to the necessary statutory modifications. Representative Kohring thanked Ms. McConnell for her attention to HB 40 and the interest from the Administration in general to work with the legislature. REPRESENTATIVE KOHRING believed that with regard to Alaska's deficit situation, the budget will have to be cut and all department's would be subject to cuts and streamlining of programs. This bill, HB 40, really speaks to the protection of the integrity of programs. The thrust of HB 40, aside from the economics, is to create a new entity that will offer "more bang for our buck." Representative Kohring described this entity as one which would have less management, preserves the integrity of programs and allows resources to be focused on the development of rural and urban Alaska. He indicated that HB 40 is a two-fold approach to save money and focus on the development of the economy. Number 2345 REPRESENTATIVE KOHRING informed the committee that the name of the department would be the Department of Commerce and Rural Development. That name was chosen in order to provide the perception that commerce and economic development will be promoted in rural as well as urban Alaska. With regard to the costs associated with the merger of the two departments, Representative Kohring stated that the merger would result in a cost savings of about $1 million. That cost savings is the result of the elimination of one of the two commissioner's offices, including that commissioner's staff. Representative Kohring acknowledged the concern that the duties and responsibilities would be increased for the new upper management staff. However, the agency is relatively small. When the total employees from both departments are combined, there are just under 500 employees. Representative Kohring did not feel the management structure would be overloaded. REPRESENTATIVE KOHRING pointed out that there are many programs that are similar in nature in both departments. He explained that the basic mission of DCRA and DCED are similar in that both promote the economy in communities in Alaska; DCRA promoting the economies in rural Alaska and DCED promoting economies primarily in urban Alaska. Therefore, it would be logical to merge these two departments. Representative Kohring referred to the committee packet which includes a list of the overlapping missions and related activities of DCED and DCRA. Merging the two departments would provide a more focused effort with the delivery of programs. Representative Kohring hoped that as a result of merging these programs, greater efficiencies and focus would be achieved which would save further dollars. He indicated that it would be difficult to quantify how much would be saved as a result of the merger of the programs. Number 2637 REPRESENTATIVE KOHRING referred to the information in the committee packet which specifies the benefits of the merger to rural Alaska. The primary goal for HB 40 is the economic development and growth in rural Alaska. He cited the following benefits to rural Alaska. First, the focus on economic development and commerce through the integration of programs would focus attention to strictly economic development as opposed to the current scattered approach. Second, the scoping and planning aspect of economic development is important due to the ability to utilize expert staff under one management roof. Third, infrastructure construction would, "Once the community has identified development projects through scoping, infrastructure can be planned and constructed. The new department will assist the community in obtaining financing for the construction phase of various projects." The fourth benefit is centralized financial assistance, the one-stop shop effort, could be applied in this situation by housing the funding sources for different programs unified under one roof. REPRESENTATIVE KOHRING noted that the committee packet includes information regarding the organizational structure. The new department, Department of Commerce and Rural Development, has three divisions as well as a grouping for independent agencies. The three divisions are the Rural Affairs Division which is formerly DCRA, the Statewide Economic Development Division which is formerly DCED, and the Division of Administration. He explained that the Rural Affairs Division essentially replaces DCRA, but most of the economic development related programs formerly located in DCRA will be located under the Statewide Economic Development Division. The name for DCRA is eliminated not its mission. REPRESENTATIVE KOHRING said, in response to Representative Joule, that the organizational chart was developed for both HB 400 and HB 40. Number 2860 REPRESENTATIVE JOULE referred to Section 73, page 41, which outlines seven divisions and directors which is not the case with the organizational chart. MIKE KRIEBER, Legislative Administrative Assistant to Representative Kohring, referred to the organizational chart. He clarified that under the Independent Agencies heading the listings for Occupational Licensing, Insurance, Alaska Public Utilities Commission, and Banking, Securities & Corporations are all separate divisions. Also under the Division of Administration the Division of Investments is included. REPRESENTATIVE KOHRING noted that the organizational chart specifies what portions of DCRA and DCED will be placed in other agencies and state government. This legislation also realizes that there are programs in DCRA and DCED that are not economic development related. For example, the child care programs, the Jobs Training Partnership Act, the statewide service delivery, and state training & employment programs would all be better suited in other agencies. As the organizational chart indicates three job training related programs are moving into the Department of Labor, and four programs related to child care will be moved into the Department of Health & Social Services. Number 2963 CO-CHAIRMAN HALCRO mentioned the discussion regarding moving the Division of Energy under the Alaska Industrial Development and Export Authority (AIDEA). Was that taken into consideration? REPRESENTATIVE KOHRING acknowledged that he had heard such discussion, but was not terribly familiar with the proposal. He stated that he would be open to modifications regarding energy development in Alaska. TAPE 99-16, SIDE B REPRESENTATIVE KOHRING expressed concern with the issue of power cost equalization (PCE) running out. There is a proposal to establish an endowment to phase out PCE while simultaneously building infrastructure related to energy development in the state. Therefore, rural Alaska could become more self-sufficient. Number 2966 REPRESENTATIVE MORGAN pointed out that child care and job training were being placed in different departments, although the two programs are directly linked. He expressed concern that the child care program would get lost in the Department of Health & Social Services (DHSS). Under welfare to work, child care and job training work together towards the goal of transitioning people from welfare to work. In order to reach this goal, child care is necessary at the one-stop center which is the current organization. MR. KRIEBER clarified that currently, the Child Care Program and the Jobs Training Partnership Act (JTPA) are both housed in DCRA as separate programs under one umbrella and therefore are not one-stop shopping. He referred to information in the committee packet entitled, "Benefits to Moving Child Care and Headstart Programs into the Department of the Health and Social Services" and "Benefits of moving Job Training Programs into the Department of Labor." Mr. Krieber noted the past two sessions the legislature has reviewed missions, measures, and the effectiveness of all departments. These programs seem to be better suited, based on departmental mission statements, within the departments as assigned under HB 40. With regard to the Child Care Program and Headstart, federal legislation has indicated the desire to fully integrate child care systems which DHSS oversees. Mr. Krieber read from the "Benefits to Moving Child Care & Headstart Programs into the Department of Health and Social Services" which states, "This federal grant initiative program is designed to develop linkages of various child and health care programs to promote comprehensive services to families: 'To remain self-sufficient, many families need other services along with child care. State and local planning should link child care to the following services: Health, Family Support Services, Head Start, and others." Furthermore, Mr. Krieber pointed out that both departments have a memorandum of agreement regarding coordination between the two departments on issues of child care. MR. KRIEBER informed the committee, with regard to moving the job training programs to the Department of Labor, that the Department of Labor's mission says, "...shall foster and promote the welfare of wage earners in the state, improve their working conditions, and advance their opportunities for profitable employment." Therefore, the job training programs seem to be better suited as Ms. McConnell mentioned by integrating those programs. REPRESENTATIVE MORGAN emphasized that the Bush does not have direct access to the Department of Labor or DHSS. REPRESENTATIVE KOHRING echoed Ms. McConnell's earlier comments that the economies of rural and urban Alaska are closely connected. Helping rural Alaska, as HB 40 would by promoting economic growth and dollars, directly benefits urban Alaska. With regard to the long-term cost savings, he reiterated that roughly $1 million in cost savings annually have been identified. The implementation of HB 40 would roughly cost $200,000. Number 2701 REPRESENTATIVE JOULE asked if the various affected departments had been asked to prepare a fiscal note. At what point will the committee have the department's version of a fiscal note? MR. KRIEBER informed the committee that he had contacted the departments which have not yet prepared the fiscal notes. Last year, the departments did combine into one fiscal note. Mr. Krieber believed that the committee had requested that fiscal note a couple of weeks ago, but it has not yet come forward. CO-CHAIRMAN HALCRO clarified that the fiscal note had been requested over three weeks ago and has not yet been received. Statute requires that a fiscal note be provided to a committee within five days of request. Furthermore, HB 40 was originally scheduled to be heard March 9, 1999. REPRESENTATIVE KOHRING pointed out that does not mean there has not been a thorough analysis of the cost. He reiterated that the committee packet does contain a fiscal note that was prepared by the sponsor last year on this issue. REPRESENTATIVE JOULE asked if there would be time to hear from the department today. REPRESENTATIVE KOHRING noted that there are several letters included in the committee packet, one of which was from Paul Fuhs, former Commissioner of the DCED, who supports the concept of HB 40. REPRESENTATIVE MURKOWSKI noticed that Mr. Fuhs' letter urged Representative Kohring to contact and work with the Alaska Municipal League; she asked if that contact had been made. MR. KRIEBER said that there were conversations with the Alaska Municipal League (AML) last year. The AML testified that the main concern was that the constitutional provision requiring an agency dealing with rural affairs be maintained. The AML has not spoken any objection to HB 40 as written this year. REPRESENTATIVE KOHRING also noted that the committee packet includes a letter of support from former Deputy Commissioner of the DCRA, Dan Tanner. Mr. Tanner's letter points out that this type of legislation is a good way to cut government, increase efficiencies and enhance economic growth, particularly in rural areas. Mr. Tanner's letter also acknowledges that the two departments perform similar tasks, therefore consideration of a merger is justified. Number 2447 CO-CHAIRMAN HARRIS stated that conceptually HB 40 is a good idea. However, the main concern is not to alienate or separate the duty and responsibility to help rural Alaska. Co-Chairman Harris informed everyone that in order for HB 40 to receive his support on the floor, there would have to be assurances that rural Alaska would not be left out as a result of this consolidation. REPRESENTATIVE JOULE inquired as to where the new sections of HB 40 were taken. He referred to the office of international trade language, the child care grants, and the revolving loan fund language. Was that language taken from somewhere else? MR. KRIEBER explained that the language is the original statutory language. He agreed that the location is only being moved. REPRESENTATIVE JOULE asked if there are any existing DCRA programs that will be eliminated as a result of HB 40. REPRESENTATIVE KOHRING replied no, but noted that there would be the elimination of one of the commissioner's offices that currently administers the programs in DCRA. REPRESENTATIVE KOHRING said, in response to Co-Chairman Halcro, that he had not had any recent discussions with Commissioner Irwin, DCRA. He noted that he had made efforts to reach Commissioner Irwin. He mentioned that the Deputy Commissioner from DCRA was present. Representative Kohring indicated the signals from DCRA suggest that the department is willing to work with him on the issue. Last year, DCRA was very much a part of the process on the legislation. Further, Representative Kohring informed the committee that last year the bill was filed quite late and refined extensively in the House Labor & Commerce Committee. Last year's legislation passed out of the House Finance Committee, but time simply ran out although there was support to pass the legislation from the House floor. REPRESENTATIVE KOHRING reiterated the intent of HB 40 was to protect the programs while recognizing the fiscal situation. Representative Kohring believed that the greatest danger to both departments would be not doing anything which would leave these programs subject to budget cuts which is one choice. The other choice is to be creative through consolidation which will address the budget cutting goals in part, while simultaneously protecting the integrity of the programs. CO-CHAIRMAN HARRIS asked if Deputy Commissioner Cotten, DCRA, had a presentation for the committee which Deputy Commissioner Cotten indicated was not the case. Deputy Commissioner Jeff Bush, DCED, did not have a presentation for the committee either. Number 2050 DEBORAH SEDWICK, Commissioner, Department of Commerce & Economic Development, said that she was available for questions. CO-CHAIRMAN HARRIS wondered why the departments were not coming before the committee since this would have ramifications for them. He inquired as to how Commissioner Sedwick would implement the changes under this merger. COMMISSIONER SEDWICK emphasized the importance of making sure that all parties are at the table and that consolidation addresses the concern of the loss of the "rural department." Therefore, she believed the work on the economic development piece to be very important. Commissioner Sedwick informed the committee that the department had been reviewing various consolidations and did not realize that a fiscal note had been requested. A fiscal note was prepared last year for the consolidation. Commissioner Sedwick pointed out that there would not be any savings, if bodies and functions are merely transferred and review is not given to what was done in the past. She hoped that a merger would result in better consolidation as well as savings. Commissioner Sedwick agreed that everyone should work together to develop something that makes sense for everyone. CO-CHAIRMAN HARRIS pointed out that the committee packet included statements regarding HB 400 from the Deputy Commissioner which states that DCED does not duplicate the efforts of DCRA. Clearly, Representative Kohring believes there is duplication between the two departments and cites examples of such. COMMISSIONER SEDWICK stated that DCED does a good job working together with other departments. She cited the Alaska Regional Development Organization (ARDOR) as an example. Last year's proposed legislation did not take into account those things in state government which would not be done in the future. Commissioner Sedwick believed that last year, the department was responding to the fact that there would not be any dollar savings, but it would actually cost to make the move without eliminating programs. This year the discussions will revolve around the possibility of transfers and agreement that some programs the state cannot afford to continue. CO-CHAIRMAN HARRIS clarified his question; are there any overlapping services between the two departments that can be combined in a cost saving manner? COMMISSIONER SEDWICK said that there are areas in DCED that would streamline which would be beneficial. Those areas would be specific programs and therefore, in that sense, there is not duplication. She acknowledged that streamlining could occur under consolidation, if everyone agreed that would be appropriate. REPRESENTATIVE JOULE asked if this consolidation occurred, would the constitution's requirement for a local government agency at the Executive Branch level be diminished due to the loss of a department or part of the department whose sole purpose is to fulfill that constitutional requirement. Number 1633 LAMAR COTTEN, Deputy Commissioner, Office of the Commissioner, Department of Community & Regional Affairs, said that the risk to which Representative Joule commented could happen due to the dilution of the mission under consolidation. For the record, Mr. Cotten noted that he was not reluctant to speak on HB 40. However, he understood that Ms. McConnell represented the Administration's position on HB 40. He said that Ms. McConnell's message was that review of consolidation is occurring and therefore, consolidation and a lot of other issues are under review internally. The expectation is to continue the internal conversations and determine where to go with this issue. REPRESENTATIVE JOULE inquired as to when the fiscal notes would be available. MR. COTTEN did not believe the fiscal notes would be very different from those submitted last year. Last year, the conclusions of Representative Kohring regarding the fiscal notes were disputed. Mr. Cotten was confident that it will actually cost money to consolidate these departments, but he believed that the Division of Administrative Services would do a closer review in light of the filling of the Atwood Building. If consolidation does occur, it would make little sense if some physical relocation of personnel did not take place. JEFF BUSH, Deputy Commissioner, Office of the Commissioner, Department of Commerce & Economic Development, stated that the fiscal notes should be prepared by the end of the week. The biggest difficulty is calculating the number of people who would be required to move. The fiscal note will be similar to last year's, but the numbers will be a bit different due to the Atwood Building situation. Number 1428 REPRESENTATIVE MURKOWSKI observed that, with regard to Commissioner Sedwick's comment that everyone should be at the table, many people are at the table although some are listening and not participating in the dialogue. Are discussions occurring in departments and are those discussions happening with the sponsor or is each party having separate dialogues? MR. COTTEN pointed out that first internal alignment occurs. The department works for the Administration and clearly the Administration and department would have its own plan. The conversations to date have been internal. Once the plan has been devised and those above the department sign-off on that plan, the conversation will become more detailed. COMMISSIONER SEDWICK noted that she had pledged to work with Representative Kohring on this issue, but internal alignment must happen. She reiterated the need to ensure that the rural focus is not diminished. Commissioner Sedwick said that there is not internal alignment at this point. REPRESENTATIVE MURKOWSKI pointed out that this idea has been around for several years. She hoped the Administration and those working on HB 40 could soon discuss the specifics of HB 40. Representative Murkowski did not want the committees to spend time signing off on HB 40 only to discover the Administration does not want to go that route and the work was for not. MR. COTTEN agreed with Representative Murkowski. Number 1169 CO-CHAIRMAN HALCRO noted that last year's legislation, HB 400, had several hearings in House Labor & Commerce Committee. He pointed out that the committee packet also includes Representative Kohring's rebuttals to various concerns raised by DCRA last year. The majority of the dialogue occurred last year. Co-Chairman Halcro asked if there were any unresolved issues from last year. MR. COTTEN said that one of the outstanding issues was that the department opposed HB 400. The Administration had a policy of opposing the consolidation of departments over the last four years. Mr. Cotten also pointed out that "we" are not exclusively reviewing these two departments. The basis for the discussions on consolidation is not driven by Representative Kohring's efforts, "ours" is broader. Mr. Cotten noted that the department does not agree with many of Representative Kohring's points, but that does not exclude the possibility of consolidation or working together towards consolidation. REPRESENTATIVE MORGAN pointed out that DCED focuses on the big picture such as marketing and overseas tourism while DCRA focuses on the small rural projects that could range from $25,000 to $50,000. In Representative Morgan's experience with contractors, the priority was to only review contracts that were of a certain dollar amount. He asked if that could be the case with this. MR. COTTEN said that there are some distinctions between the departments with regard to who the customers are and the level of money. With any integration of government agencies, much of the outcome is based on the personalities involved, the intent, and the willingness to work together. Number 0836 KEVIN RITCHIE, Alaska Municipal League (AML), understood that the Governor is discussing consolidation which is something the AML membership would like to review. He said that AML does not want to get terribly involved in an efficiency move. Mr. Ritchie emphasized the constitutional requirement for a local government agency which places much emphasis on having a good relationship with municipal governments and building the coordination between municipal and state government. That creates efficiencies for taxpayers. For example, there are currently between 20,000 to 22,000 state employees, while on the local level, including school districts, there are 35,000 local government employees. That illustrates the importance for municipal and state government to work together through DCRA which, per the constitution, is the local government agency. Mr. Ritchie said, "Our obvious concern would be that it not be put as an optional duty to a large department. That is something I concur in with Deputy Commissioner Cotten." REPRESENTATIVE JOULE asked if any of the AML members supported HB 40. MR. RITCHIE said that the AML had not received support for HB 40. Last year the AML opposed HB 400. Mr. Ritchie noted that the AML is willing to work with the Legislature and the Administration to develop efficiencies. REPRESENTATIVE JOULE asked if the AML had received any opposition to HB 40. MR. RITCHIE replied yes. Although the AML has not heard from every community, Mr. Ritchie felt that every community has a stake in the local government agency and would like to ensure that remains a strong function of state government. CO-CHAIRMAN HARRIS asked if the AML membership felt that the merging of the two departments would diminish the focus of the local governance. MR. RITCHIE said that when there is one administrative head with two missions, the workload is essentially doubled. Therefore, on the commissioner level the answer is no. With regards to the mission within the department, HB 40 has two sections, one of which lays out the duties of the department with "shall" language while the combined duties of the DCRA uses "may" language. Number 0376 REPRESENTATIVE JOULE asked if the AML membership had instructed Mr. Ritchie to work with the Administration or Representative Kohring to review consolidation. MR. RITCHIE said that he had not received specific instructions to work with the Administration and the Legislature, but that cooperation is inherent in the job. He believed that the board of directors was waiting for the Governor's proposal. Therefore, the AML has not yet reacted. In further response to Representative Joule, Mr. Ritchie noted that the AML has regular legislative meetings one of which will be March 23, 1999 at 10:00 a.m. during which this issue will be discussed. Mr. Ritchie said that the AML does not like it when the legislature or the governor do something making it more difficult to do the job at the local level. Mr. Ritchie noted that trying to provide appropriate input without trying to direct a process aimed at efficiency is difficult. CO-CHAIRMAN HALCRO inquired as to why the AML members who are concerned have not contacted Representative Kohring or offered suggestions in order to create a better product for everyone. MR. RITCHIE pointed out that the AML has not seen the Governor's proposal yet. Mr. Ritchie stated that his review of HB 40 did not uncover the importance of the local governance agency which he believed to be the key issue for municipal governments. TAPE 99-17, SIDE A REPRESENTATIVE KOHRING noted that last year there was a lot of opposition to this legislation. Now that Alaska faces a huge deficit many folks are realizing the need to act unless programs are to be eliminated in state government. Therefore, there has been more receptiveness to this legislation this year. Representative Kohring did note that this legislation has been around for about a year. He recognized that there may never be total agreement on the specifics within this legislation. He indicated that the focus on HB 40 should be with regard to the greater efficiency in government, the combining of programs with similar missions while preserving the integrity of programs by taking the focus away from the need to eliminate those programs. REPRESENTATIVE JOULE inquired as to the intention of the Chair. Number 0342 CO-CHAIRMAN HARRIS informed the committee that HB 40 has two other committees of referral, the House Labor & Commerce Committee and the House Finance Committee. The House Judiciary Committee may also hear HB 40. Co-Chairman Harris noted that HB 40 does not have a fiscal note and therefore last year's fiscal note may have to be adopted in order to report HB 40 out of committee. Co-Chairman Harris stated that he intended to attempt to move HB 40 forward. REPRESENTATIVE JOULE expressed concern with reporting HB 40 out of committee. He believed it was good to have an overview of HB 40, but these type of changes should be dealt with in this committee. Representative Joule hoped that HB 40 would be scheduled for another hearing. This is the House Community & Regional Affairs Committee and not one community has been heard from on this issue. REPRESENTATIVE MURKOWSKI agreed with Representative Joule. This committee probably has greater knowledge and impact on HB 40. Representative Murkowski did not particularly want to see HB 40 held up, but indicated the need to hear from interested parties on more specifics of the issue. She thought that those who had spoken seemed to indicate that they conceptually endorse HB 40. Representative Murkowski was not completely convinced that the committee had completed its task. CO-CHAIRMAN HALCRO agreed with Representatives Joule and Murkowski and he noted that the committee had time on March 25, 1999 to reschedule HB 40. Co-Chairman Halcro reviewed the history of HB 400 last year. He pointed out that this year the legislation, HB 40, was introduced early this session. Originally, HB 40 was scheduled for March 9, 1999 and was postponed until today. Co-Chairman Halcro expressed frustration with the lack of substance provided in the testimony today as well as the lack of testimony from the departments. There is much opportunity for input, but no one is providing any testimony. He agreed with Representative Joule's comment that this committee has a commitment to listen to the considerations of communities and regions. Co-Chairman Halcro agreed that HB 40 should be held, but emphasized the need for people to come forward to discuss this issue. Number 0806 REPRESENTATIVE JOULE said that last year, it was very clear that the Administration opposed HB 400. This year the testimony did not provide out right support or opposition for this. Representative Joule believed there would not be a lack of people at the table at the next hearing. He noted that he has some concerns with HB 40. If HB 40 seems to embody the will of the legislature, Representative Joule hoped that communities will offer recommendations. Representative Joule noted that any time he criticizes something he attempts to offer a solution. REPRESENTATIVE DYSON predicted that at the next hearing most of the testimony will be negative. The rural areas will have a legitimate concern that the rural interest will not be maintained and the agencies will be uneasy. Representative Dyson was heartened that the Administration recognizes that "business as usual" cannot continue. Mr. Cotten's comments were particularly germane in that no matter what is done with these departments, the effectiveness ultimately lays in the goodwill, skill and experience of those who are charged with the implementation. Representative Dyson said that he favored reporting HB 40 out of committee. Representative Dyson emphasized that HB 40 would make a strong policy statement regarding the continuation and importance of the missions of the individual organizations. If there is a motion to report HB 40 out of committee, Representative Dyson said he would support that motion. In conclusion, Representative Dyson reminded the committee that it would be near miraculous if HB 40 moves through both bodies of the legislature. REPRESENTATIVE MORGAN agreed that HB 40 should be held in order for the communities to come before the committee. He felt it irresponsible for him not to allow those communities to speak. There being no further public testimony, the public testimony was closed. The committee took an at-ease from 9:58 a.m. to 10:02 a.m. Number 1340 CO-CHAIRMAN HARRIS announced that HB 40 would be heard on March 25, 1999. He encouraged all interested parties to be prepared to testify because it is the intent of the Chair to move HB 40 at the next meeting. Co-Chairman Harris requested that there be a fiscal note attached to HB 40 at the next hearing. REPRESENTATIVE KOHRING thanked the committee for its time. He also appreciated the concerns of the committee members.
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