Legislature(2005 - 2006)HOUSE FINANCE 519

02/16/2006 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 369 APPROPS: ENERGY-RELATED, PIPELINE & MISC. TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
= HB 421 FAST TRACK SUPPLEMENTAL APPROPS
Heard & Held
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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