Legislature(2009 - 2010)HOUSE FINANCE 519
03/02/2009 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB81 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 81 | TELECONFERENCED | |
| += | HB 83 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 81
"An Act making appropriations for the operating and
loan program expenses of state government, for certain
programs, and to capitalize funds; making supplemental
appropriations; and making appropriations under art.
IX, sec. 17(c), Constitution of the State of Alaska;
and providing for an effective date."
Co-Chair Hawker reported on last year's professional
services contract with Janet Clarke for $25,000 regarding
health and social services issues, especially Medicaid. Co-
Chair Hawker stated a wish to extend that contract.
1:42:24 PM
Co-Chair Stoltze MOVED that the House Finance Committee
authorize the Co-Chair to amend the professional services
contract with Janet Clarke for an additional amount, not to
exceed $25,000. There being NO OBJECTION, it was so
ordered.
Co-Chair Hawker clarified the meeting's agenda.
1:43:50 PM
Co-Chair Stoltze MOVED to ADOPT the work draft to HB 81,
labeled 26-GH1002\P, Bailey, 3/1/09.
Co-Chair Hawker OBJECTED for discussion purposes.
Co-Chair Hawker referred to the packet of materials
supporting the new Committee Substitute (CS), which include
subcommittee reports. He termed the work draft (CS) an
admirable product, a refining of the governor's initial
frugal proposal. He emphasized that the official budget
documents are those published by Legislative Finance and are
posted on their website. In addition to the official
finance documents, there are closeout narratives by each
subcommittee. He explained the transactional abstracts and
described the format used. He stated that the abstracts are
working documents, not official documents.
1:47:54 PM
Co-Chair Hawker turned to four sequentially numbered
documents. He focused on Document #1 and pointed to the
total funds column, which depicts agency operations that
total about $50 million less than the governor's proposed
budget. He reported a minor change in debt service funding.
The fund capitalization of a negative $32 million is a
change in approach. The House Finance Committee recommends
fully funding Power Cost Equalization (PCE) regardless of
any legislative action to increase or decrease benefits.
The method of funding directly through the Department
requires less capitalization of PCE.
1:50:54 PM
Co-Chair Hawker pointed to a special appropriation of a
negative $200 million, which is due to not being required to
fund the oil and gas tax exploration credits. At the
beginning of the legislative session, $400 million had been
appropriated to those credits the prior year. In the
supplemental budget, the administration proposed to reduce
that appropriation by $200 million and appropriate another
$200 million in the FY10 budget. The House Finance
Committee proposes to get to the same amount by leaving the
original $400 million appropriation in place, letting it go
forward, and not adding any more funding to the budget this
year.
1:52:13 PM
Co-Chair Hawker observed that there is a shortfall in
anticipated revenues to operations.
Co-Chair Hawker stated that at this point in time, the only
item from the federal stimulus money included in the
operating budget is the change in the Federal Medical
Assistance Percentages (FMAP) rate for Medicaid. He
reported on the history of changes in the FMAP rate. The
intent language in the federal economic stimulus program is
to take pressure off of state budgets, so it is appropriate
to include it in the operating budget. That resulted in a
general fund savings of $74 million in the FY10 budget.
1:55:04 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
clarified that the $74 million was included in the
governor's amended budget, which results in a net zero when
comparing the budget versions.
Representative Gara requested clarification on the amount of
federal stimulus money coming to Alaska. Mr. Teal reported
that the stimulus package is a separate bill not before the
committee. The $74 million FMAP change is a known entity,
retroactive to October, and also affects the FY09 budget.
Beyond that, the components are not known.
1:57:23 PM
Co-Chair Hawker clarified that the FMAP change was effective
October 1, 2008, and extends through December of 2011. The
$74 million amount applies to the FY10 budget. About $45
million of that is allocable back to the FY09 budget. The
remainder will carry over into the FY11 budget. There is a
bonus calculation of additional FMAP money, based on
unemployment numbers, for which Alaska does not currently
qualify.
Representative Gara asked if more information would be
forthcoming. Co-Chair Hawker said it would.
1:59:34 PM
Mr. Teal pointed out that the CS for HB 81 and the CS for HB
83 will be posted on BASIS this year.
Mr. Teal referred to the agency summary, Document #2. He
said he would describe the changes made in the House Finance
subcommittee reports, plus the chairman's recommendations,
which resulted in the CS. He explained that column one is
the actions the subcommittees took and column two is the
chairman's actions. Those added together result in the CS.
The focus is on agency operating budgets.
Mr. Teal reported that what is in the CS is a combination of
subcommittee reports and other actions by the chairman,
which are contained in Document #3.
Mr. Teal turned to Document #3 to note that the new method
of dealing with PCE - the $28 million "reduction" - occurred
in the chairman's office. Mr. Teal referred to a
transaction on page 2, labeled "cap to op". It's one of
many in the report with that label. Legislative Finance,
OMB, and the chairman determined that some items the
governor had proposed as capital budget items were better
placed in the operating budget. An example in Commercial
Fisheries is on page 2; another from the Department of Labor
and Workforce Development is on page 3. On page 4, a number
of Department of Natural Resources projects better suited
for the operating budget are listed.
2:04:09 PM
Representative Gara asked about the proposed changes from
the capital to the operating budget. Mr. Teal clarified
where those changes were. Representative Gara asked what
the subcommittee action entailed. Mr. Teal explained that
the subcommittee action began with the adjusted base and
then reviewed all of the governor's amendments.
Representative Gara inquired if any columns represent the
governor's proposal. Co-Chair Hawker explained that
Document #1 is the reconciliation of the governor's budget
proposal, with amendments, to the subcommittee proposals.
Mr. Teal reiterated that his discussion began with an
explanation of the differences between the subcommittee
action and the CS.
Representative Gara requested further clarification.
2:06:43 PM
Representative Austerman requested more information about
Document #2.
Mr. Teal clarified that the governor's budget was the
starting point for the subcommittees' reports. Column one
represents the subcommittees' actions. In some cases, the
governor's requests were accepted, in other cases, changes
were made. Co-Chair Hawker pointed out that the information
has been on the web since Friday.
Mr. Teal continued to explain the first column. In most
cases, the subcommittees accept or reject the governor's
amendment, but they can also modify it or add their own
items. They can also make reductions. Column two is the
chairman's prerogative to change the bill, especially the
language section of the bill. Document #3 contains the
detailed changes made to the subcommittees' reports by the
chairman. He used PCE as an example and commented on the
advantages and disadvantages of the proposed method of
funding PCE.
2:10:32 PM
Mr. Teal referred to capital items that were moved to the
operating budget, as shown in Document #3. The last item on
page 5, Marine Highway System, Marine Vessel Operations, is
the addition of a very late amendment for the bargaining
unit contract terms. Co-Chair Hawker related that the
bargaining unit settlement was included in the CS in order
for it to be as comprehensive as possible.
Mr. Teal pointed out that all items are subject to the
amendment process. Capital project detail is available on
Legislative Finance's website and on OMB's website.
Co-Chair Hawker commented that the purpose of the documents
is to disclose changes to the CS. Page 6 shows a change to
the University of Alaska budget.
2:13:39 PM
Mr. Teal referred to changes to the language section of the
bill. On page 58 of HB 81, Sections 4-6 show intent
language that was in the FY09 operating bill. Co-Chair
Hawker offered that the language section analysis is
available in a booklet for the public to read.
Representative Austerman requested clarification of the
language section changes. Mr. Teal explained that Sections
4-6 consists of intent language from last year's bill, which
the chairman wishes to reinstate. It says that program
receipts will be used before general funds are used. The
costs of job reclassifications are already included in the
budget. Transfers should not be made between personal
services and other line items without filing a report.
Mr. Teal referred to page 60, Section 10, subsections (d)
and (e), the changes to the PCE program. The money now
flows directly to the Department of Commerce, both from the
endowment and from the general fund. The amount in (e) is
the amount needed to fully fund the program.
2:16:45 PM
Mr. Teal referred to a fuel trigger on page 62, Section 16,
Office of the Governor. Last year it was down to one
trigger.
Representative Salmon asked for an explanation of the fuel
trigger. Mr. Teal explained that it is a method used to
attempt to avoid building short-term, high fuel prices into
the base budget of the agencies. He recalled last year's
experience when the fuel trigger occurred in August during
high prices and then prices fell. Some agencies may have
gotten more money than they needed to pay fuel costs. This
year there are two triggers, one in August and one in
December, with half of the amount given with each of the
triggers. The trigger is the year-to-date ANS price of oil.
Co-Chair Hawker added that the administration has total
latitude in allocating the fuel triggers within the
parameters provided in the bill. Mr. Teal informed the
Committee that 75 percent goes to DOT and most of that goes
to the Alaska Marine Highway System.
Mr. Teal explained that the fuel trigger was removed from
the Office of the Governor and a pseudo agency called
"Branchwide Unallocated" was created because the fuel
trigger distorted annual budget comparisons.
2:19:33 PM
Mr. Teal related that a section of the bill was missing -
Section 16. Included in Section 16 were a number of
transactions for oil and gas development. Co-Chair Hawker
reported that the section was omitted until more information
was received from the administration.
Co-Chair Hawker reported that a great deal of money has been
spent on oil and gas through various budgets and spending
authorities. He said that in order to evaluate the current
requests for additional funding for oil and gas projects, he
has requested a summary of appropriations from OMB. He
hoped to get that analysis in the next few days and work up
an amendment to address Section 16.
2:22:04 PM
Representative Austerman asked how far back the information
request went. Co-Chair Hawker said FY04.
Mr. Teal referred to a change on page 69, Section 22. It is
a large change from the governor's original budget. The CS
now matches the governor's amended contributions to the
retirement system funding, which is roughly $170 million
less than originally proposed. The amount covers the full
actuarial recommendations; however, it does not include the
additional $170 million. Co-Chair Hawker reiterated that
the budget includes full funding of all actuarial
obligations.
2:23:53 PM
Mr. Teal turned to page 70, Section 23. There is an
addition for the Inland Boatmen's Union and for the Masters,
Mates, and Pilots, due to new contract negotiations. The
terms of the contracts are funded in Section 1 of the bill.
Mr. Teal explained Section 26, the Constitutional Budget
Reserve Fund (CBR). He noted that subsection (d) is the
FY09 CBR draw. Standard CBR language says when there is a
shortage of unrestricted revenue to cover general fund
expenditures, the money comes from the CBR. Co-Chair Hawker
offered that during the course of the previous budget year,
the legislature appropriated almost $5 billion into the CBR
when oil prices were high. Since the market decline, some
of those funds will be removed from the CBR.
Mr. Teal reported that subsection (e) states that the amount
going to revenue sharing is appropriated directly from the
CBR. Normally, that account is funded from revenue from the
progressive portion of the petroleum tax.
2:26:29 PM
Representative Gara referred to last year's formula for
municipal revenue sharing. He wondered what that amount
was. Co-Chair Hawker replied that the fund was capitalized
at $180 million. One-third of the amount in the fund each
year is committed to revenue sharing. The fund gets
refilled each year by progressivity earnings and depends on
the price of oil. There is an expectation to put $60
million back into the revenue sharing fund out of the FY10
budget in order to forward fund the next year's amount.
Representative Gara asked if there is another provision in
the bill related to the $60 million appropriation. Co-Chair
Hawker replied that in FY10 the $60 million is fully funded.
Mr. Teal clarified that there is not another appropriation
in the bill; this section obligates the $60 million to
revenue sharing. He described different scenarios depending
on if this appropriation passes or not.
Representative Gara wanted assurance of revenue sharing
regardless of the price of oil and the progressivity factor.
Mr. Teal emphasized that the $60 million that flows out of
the fund to the communities does not require appropriation.
2:29:54 PM
Mr. Teal explained subsection (f) where the sum of $1.1
billion is appropriated from the CBR to the public education
fund. Without further appropriation, the balance of the
fund is available and probably would be used for FY10
education. The $1.1 billion would fund FY11 education. The
governor requested $1.06 billion, about $50 million less
than was required to fund FY11 education. The governor used
a $50 million cushion in the reserve account. This
appropriation adds an additional $50 million more than the
governor requested. It will not impact the CBR until 2011.
Mr. Teal stated that subsection (g) is the CBR draw for
2010.
2:31:40 PM
Mr. Teal referred to Document #4, the "language only"
section, and explained three items that have changed. One
change is $32 million that appears in the agency budgets
column under the Department of Commerce, Community and
Economic Development. That amount is offset by a reduction
in fund caps "because we are now going direct". The second
change is the removal of $200 million in oil and gas
credits. That amount is being kept in the FY09 budget,
which results in a net zero. The third change encompases
all the oil and gas appropriations in Section 16 of the
governor's bill.
Co-Chair Hawker summarized that the CS was the result of
subcommittee work and chairman input. Co-Chair Hawker
preferred not to have a second CS. He related that he was
still looking at FY09 supplemental requests, agency
requests, and amendments.
2:34:27 PM
Mr. Teal clarified that BASIS contains the bill and
subcommittee reports, but not the Legislative Finance
technical reports, which are on the Legislative Finance
website.
Representative Gara requested further information about
Document #4. Mr. Teal reviewed that column one was the
governor's amended requests. Co-Chair Hawker interjected
that Document #4 is exclusively language section components.
2:36:50 PM
Co-Chair Hawker WITHDREW his objection to adopt the work
draft for HB 81. There being NO OBJECTION, it was so
ordered.
HB 81 was heard and HELD in Committee for further
consideration.
2:37:35 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| Subcommittee Narratives.pdf |
HFIN 3/2/2009 1:30:00 PM |
HB 81 |
| LFD Subcommittee Reports.pdf |
HFIN 3/2/2009 1:30:00 PM |
HB 81 |
| Work Draft HB 81 Version P -0301.pdf |
HFIN 3/2/2009 1:30:00 PM |
HB 81 |
| Work Draft HB 83 Version R-0228.pdf |
HFIN 3/2/2009 1:30:00 PM |
HB 83 |