Legislature(2013 - 2014)HOUSE FINANCE 519
03/13/2013 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB65 || HB66 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 65 | TELECONFERENCED | |
| += | HB 66 | TELECONFERENCED | |
HOUSE BILL NO. 65
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, amending
appropriations, and making reappropriations; and
providing for an effective date."
HOUSE BILL NO. 66
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
9:01:40 AM
Co-Chair Austerman directed the committee's attention to
the new CS for HB 65.
Co-Chair Stoltze MOVED to ADOPT the proposed committee
substitute for HB 65, Work Draft (28-GH1799\P) as a working
document. There being NO OBJECTION, the CS was ADOPTED.
PETE ECKLUND, STAFF, REPRESENTATIVE ALAN AUSTERMAN,
addressed the changes in the new CS. He believed that all
the amendments that had been adopted the prior day had been
properly incorporated into the CS; in addition, there were
several small and conforming technical amendments made by
the drafters. He pointed to an operating budget agency
summary from the Legislative Finance Division (copy on
file) and directed the committee's attention to the first
page of the summary, which was labeled "A." He discussed
the "2013 management plan to House comparison" column and
related that the agency operations costs in the new CS for
HB 65 were $40,250,100 below the 2013 management plan; $36
million of that amount was hollow receipt authority, making
the real dollar figures of the CS $4,250,100 under the
management plan in General Funds for agency operations. He
pointed to the column labeled "House" and explained that
the bill's statewide total on the bottom represented
$6,495,336,800 in General Funds. He directed the
committee's attention to report "B" on page 3 of the agency
summary, specifically to the House column, which depicted
the number and language in all funds. He related that HB 65
totaled $8,222,398,900 in numbers and language for all
funds for agency operations; the addition of statewide
items increased the total to $9,809,291,500.
9:05:29 AM
Co-Chair Stoltze MOVED to REPORT CSHB 65(FIN) out of
committee with individual recommendations.
Representative Gara OBJECTED for the purpose of discussion.
Representative Gara expressed concern about the budget and
offered that it was designed to some form of the governor's
oil-tax proposal. He thought that the budget would cause
more harm to the state than the committee realized and
referred to the testimony against the statewide education
cuts. He warned that if the cuts to education continued,
people might not want to raise their children in Alaska;
however, this could be avoided if the state was able to
reverse its current course of school and school staff cuts.
He pointed to minority efforts to work to reverse some of
the budget cuts. He acknowledged that there was pressure
from the governor on those who supported his agenda to cut
the budget substantially. He noted that he and
Representative Kawasaki had offered some cost savings and
hoped to find some additional cost savings in superfluous
areas while examining the Department of Health and Social
Services (DHSS) budget over the coming summer. He offered
that the state had vastly inadequate services for
individuals with emotional disturbances and disabilities,
mental health problems, autism, and those at risk of
suicide. He acknowledged the pressure that committee chairs
were under to find cuts to the budget, but disagreed with
the $8.3 million cut to substance abuse, mental health, and
emotional disturbance funding that would result from a vote
the prior day.
Representative Gara pointed out that the $8.3 million in
funding would not be in the base funding in a year's time.
He offered that there would be an attempt to use funds from
the budget to supplement the substance abuse, mental
health, and emotional disturbance funding for one more
year, but stated that this did not represent the "hand"
that he wanted to lend to those in the greatest need. He
expressed his displeasure at the budget cuts to Pre-K
education funding. He stated that Alaska's Pre-K pilot
program was now in its fourth year, had been proven to
work, and served 2 percent of state's Pre-K education-
eligible population; exclusive of the federally funded Head
Start program, other states served 28 percent of the same
population. He expressed concern that Alaska could end up
becoming an "education backwater." He conceded that a lot
of money in the budget had gone into education, but offered
that the funding would go into areas other than the
classroom, such as state-employee retirement and school
transportation. He referenced the cuts to "virtually" every
school district in the state. He discussed a cut of
$400,000 to the Alaska Infant Learning Program and shared
that the program was an important effort to screen people
with autism, hearing problems, and vision problems and was
not an area where funding should be cut. He stated that he
was always happy to cut waste and that Alaska needed to
find waste to cut; however, the current budget was not one
that he could vote for.
Representative Gara appreciated that people had been
willing to listen and had been polite during the budget
formulation process. He pointed out that the prior 4 years,
the legislature had been able to formulate a budget that
many in both parties could agree with, but offered that the
differences were too vast in the current year. He expressed
disappointment that he and Representative Kawasaki had
voted for most of the majority amendments; however, despite
their strong logic, they had been unable to gain funding
support for Pre-K, education, behavioral health, or infant
learning. He asserted that bi-partisanship had to go both
ways and offered that the "raw" vote against every minority
amendment made him realize the extent of the divide between
the philosophies in the committee. He reiterated that he
could not vote for the budget. He reported that he believed
that the state should be doing everything it could to
create opportunity for the next generation, but that the
budget did not reflect those beliefs.
9:13:37 AM
Representative Gara surmised that Vice-Chair Neuman had
been shouldered with making the hardest cuts of any of the
subcommittee chairs in the DHSS budget. He pointed out that
DHSS had the largest budget and related that Vice-Chair
Neuman had preserved the integrity of most of the efforts
to help people who faced severe problems in Alaska;
however, he did not agree with the behavioral health cuts
or using some of the supplemental funds to reverse some of
the shortages by covering a one-time payment. He offered
that the some areas in the DHSS budget did not need to be
cut so drastically. He appreciated that other members were
collegial during the process and stated that sometimes
there were simply differences in philosophy. He stated that
the voters elected the people who they agreed with and that
not every district was the same.
Co-Chair Austerman responded to comments made by
Representative Gara and related that some members of House
had spent the past 5 years attempting to get the
legislature to sit down and have the conversation about
what would happen when the state was getting close to
falling off of a fiscal cliff; there had been very little
traction among the legislative body to take a hard look at
where the state would be financially in the future, which
was where it now found itself. He agreed with
Representative Gara that both parties had been able work on
the budget together the prior 4 years, but observed that
there had also been a surplus of money in during that time
and that the state had been able to save; without the
proper planning of where the state would be in the future,
the legislatures had spent because the money was there. He
pointed out that the Department of Revenue had stated that
Alaska was in deficit spending and that he believed the
department. He discussed the need to grab and maintain
control over state spending and offered that the budget
before the committee accomplished that
Co-Chair Stoltze thanked Co-Chair Austerman, as well as the
subcommittee chairs and members for their work on the
budget. He pointed out that Vice-Chair Neuman had chaired
11 hearings and that Representative Costello had chaired 8
committee meetings for the Department of Commerce,
Community and Economic Development and the Department of
Natural Resources budgets; these committees had held the
most meetings and a significant number of the issues that
had arisen fell under their purview. He offered that the
debate was about $4 million less than the previous year and
stated that a 4 percent reduction was not a slowdown or a
shutdown. He pointed to the nearly $10 billion operating
budget and asserted that it was not sustainable. He stated
that the budget process would only becoming more
scrutinizing as the state was facing a steady revenue
decline.
Co-Chair Stoltze pointed out that some people were confused
with the discussions that occurred in government and why
the budget could not be trimmed. He referenced questions
that the press had asked him regarding if he was surprised
that there were 75 to 100 people present to testify on the
budget during public testimony, but offered that a lot of
those people were active participants in the process every
year; furthermore, there were 10,000 to 20,000 people in
his district that that could not be present to testify
because they were driving 100 miles round trip to work and
were wondering why the state was not getting control of the
budget. He reiterated that a $4 million reduction did not
represent a "draconian" cut and pointed out that the budget
process would only get tougher. He surmised that Alaska was
facing some tough decisions and that it would be difficult
for the state to simply maintain a zero growth budget to
hold the line where it was. He pointed out that the
committee had disagreed with the governor and had denied
some of the administration-supported increases that the
committee felt did not fit its plan of sustainability. He
observed that the budget the committee had approved was not
even sustainable, but was meant to "turn the corner." He
warned that the state was in for tougher times regarding
its budget.
9:20:43 AM
Vice-Chair Neuman stressed that the state's income revenue
had become less than its bills and that it was facing a
difficult situation for the first time in many years. He
related that working with the DHSS budget had given him
some different insights. He pointed out that there were
indicators of the broader economy within the DHSS budget
and reported that the number of people on food stamps went
from 20,000 to 40,000 from 2008 to 2012. He emphasized that
the increase had occurred when the state had $3 billion
capital budgets. He shared that the state did not have
enough money for capital budgets and that although it had
money in savings, it did not have enough to pay its bills.
He related that the DHSS budget would be the first budget
to start to feel the effects of the economy and that when
people did not have jobs, there was growth in spousal
abuse, the sexual abuse of minors, alcohol abuse, and drug
abuse; he offered that the next departments to feel the
effects would be the Department of Public Safety and the
Department of Corrections. He pointed out that if the state
did not arrest the growth in the operating budget and cover
its costs without taking money out of savings, there would
be a progressivity factor in the budget that would grow
higher every year.
Vice-Chair Neuman believed the state needed to be able to
do large capital projects such as bridges, dams, interties,
and pipelines in order to reduce the risk assessment for
private industry that was interested in investment in
Alaska and create jobs. He shared that the state needed to
use every tool in order to attract private industry to
invest in Alaska and help create jobs. He pointed out that
taking money out of savings would affect the state's bond
rating and referenced that the state had obtained its last
general obligation bonds at a very good rate with its AAA
bond rating. He explained that bonding agencies realized
that 90 percent of the state's income was tied to oil that
had been declining at a rate of 6 percent to 7 percent for
more than 25 years and pointed out that the decline had
been masked by the increases in the price of oil. He stated
that taking out of savings would affect the state's bond
rating and its ability to partner with private industry to
produce the large capital projects that would create jobs.
He offered that people would rather have a job than to be
using food stamps and opined that the growth in the
operating budget was a cumulative ball that would hurt the
state in the future.
Vice-Chair Neuman continued to speak to the operating
budget. He shared that trying to cut programs for mentally
disabled children, handicapped individuals, or senior
citizens had been extremely difficult. He related that the
cuts were needed to avoid even more drastic cuts further
into the future. He discussed the $8.3 million in cuts
referenced by Representative Gara and indicated that the
funding was money that was not being used in programs at
the current time. He pointed out that things would get
worse and spoke to the rising cost of medical services. He
referenced information indicating that the average
Alaskan's entire paycheck would go towards covering medical
costs by the year 2037. He stated that there was a lot of
work ahead of the state and that some statutory changes
might have to be made. He noted that he would work in the
coming summer to come up with some different concepts on
some possible changes to statutes. He pointed out that the
items he had worked on were all proposed cuts in the
governor's budget and stated that while the commissioners
of DHSS and the Department of Transportation and Public
Facilities were not happy about the cuts, they had all
worked together on the budget. He stated that the reduction
would help make the future even less painful regarding the
budget and asserted that doing more in the current year
would help in the future. He related that 28.3 percent of
the people in Mat-Su received some form of assistance and
that in Western Alaska that percentage was 78 percent to 80
percent. He spoke to the need to create jobs through
private industry. He supported the budget and offered that
while he would have liked to support some of the ideas from
the previous day, had been unable to because of the deficit
mode that the state was in. He expressed the need to
protect the future of the Alaska's children.
Co-Chair Austerman agreed that jobs would be a critical
component of making sure that Alaska remained healthy, but
clarified that leaving money over for capital projects was
not part of the structural component of building the
operating budget; the process was formed around the
operational budget itself, as well as the ability to carry
forward and manage that budget. He further explained that
the operating budget was not tied to figuring out how to
save money for capital projects.
Vice-Chair Neuman affirmed the comments of Co-Chair
Austerman. He clarified that he meant that it would be a
good thing to give people jobs and try to attract private
industry that could create jobs from our resources.
Representative Wilson clarified that she did not make any
cuts based on a bill. She stated that the committee tried
to measure a program's success based on information
garnered from the different departments and decide on
whether to continue programs or start new ones. She
expressed frustration that programs were started and that
school districts and other entities were given the
understanding that the state would be able to offer every
program for free, which was not a possibility. She offered
that there had to be a commitment on both sides that showed
a desire for programs to work. She spoke about the need for
accountability and queried if the state should continue to
compete with the private sector in Pre-K education. She
opined that it was misleading to use figures that showed
the percentage of Pre-K eligible students in the Alaska
that were in programs and offered that the state had many
great programs that were not in the public sector;
furthermore, there were head start programs that were
federally funded that were not accounted for in some of the
figures.
Representative Wilson offered that Alaska was taking care
of its students not only through programs, but also through
parents who worked on a one-on-one basis that was not
measured in programs. She stated that Alaska took
education, from Pre-K to beyond post-secondary, very
seriously. She offered that although it should have been
doing so all along, the state was a point where it had to
make an accountability measurement for grant funding that
determined what the state was getting for its money, as
well as whether it was something the private sector should
be doing; she mused that if the state asked that question
more often, it might find that the private sector could not
only offer some of the services more affordably, but could
also offer a better quality of service. She pointed out
that she worked on the education budget year-round, which
involved looking at the programs, as well as talking to the
districts and parents regarding what was important and how
to accomplish it. She pointed out that the next year's
budget process would be more difficult and that the formula
programs would be examined because that was where most of
the money resided. She spoke about how difficult it was to
make the current cuts, but offered that it would result in
things being easier the following year. She wanted the
public to be aware that Alaska was going into its savings
with the current budget and that the state was spending
more money than it was earning in revenue. She concluded
that the state needed to stop spending more than it was
making.
9:33:03 AM
Representative Gara wanted a clarification on the record.
He understood disagreement on the issues, but asserted that
there was nothing said prior to the last speaker's
statement that was misleading. He explained that the last
speaker may have disagreed with certain things that were
said, but that there was nothing misleading about the
statements. He requested that the issues be argued based on
merit.
Representative Munoz pointed out that each committee had
examined the 10-year annual growth of the budget and that
the average growth had been between 4 percent and 7 percent
for each department per year. She related that a 4 percent
to 7 percent growth rate per year was not sustainable,
particularly given the declining oil production each year.
She emphasized that the budget "held the line" and did not
represent a lot of cuts from the prior year's budget. She
felt that the budget was responsible and the cuts were
absolutely necessary, despite the difficult discussions in
subcommittee. She discussed the cuts to the behavioral-
health grant funding and offered that it was the area that
public was the most vocal on. She was comfortable with the
budget because the $9 million in increases that DHSS had
received the previous year could be applied towards the
$8.3 million behavioral grant line item in the FY14 budget;
she was comfortable voting yes on the budget, knowing that
those programs would be protected. She explained that the
legislature would have to opportunity the next year to
reexamine that $8.3 million allocation and have a
discussion about moving forward with the obligations. She
stated that the budget's $2 million in funding for the Pre-
K pilot project was a continuation and was the same amount
that had been funding the previous 3 years. She clarified
for the record that the Pre-K funding did not represent a
cut.
9:35:58 AM
Co-Chair Austerman agreed with the majority of the comments
provided. He noted that there were a lot of emotional
issues involved in the discussion and that the state had to
take a hard look at slowing and controlling its budget
after 10 years of growth. He related that due to the timing
that it took to make changes within an operating budget,
the process would become harder each year. He applauded the
governor for producing a budget that controlled growth. He
thought that the governor's budget represented 0.8 percent
in growth from the previous year and compared that to the
prior 10-year average of 6.5 percent growth per year. He
explained that the governor had started the process of
gaining control of the budget and that the committee was
taking a bit harder look than the governor had done. He
relayed that the current budget's total was still larger
than the previous year and opined that it would probably
need to be reduced even further in subsequent years. He
believed the upcoming years would be more difficult and
thanked committee members for all of their work on the
issues. He stated that the process that Vice-Chair Neuman
had started with DHSS would be continued and that the full
House Finance Committee would meet during the interim to
discuss the direction that DHSS would take. He stated that
the current budget did not contain everything and that
there were union contracts and other items that were
anticipated to make the budget grow more. He observed that
the Senate would also examine the budget and may opt to put
items back in.
Representative Gara WITHDREW his OBJECTION.
There being NO further OBJECTION, CSHB 65(FIN) was REPORTED
out of committee with a "do pass" recommendation.
Co-Chair Stoltze MOVED to REPORT CSHB 66(FIN) out of
committee with individual recommendations.
Representative Costello OBJECTED for discussion.
Representative Gara assumed that there had not been any
changes made to HB 66 since it had been introduced by the
governor's office.
Co-Chair Stoltze explained that the 1 change was a
conferancable action that was on page 8 of bill. He
expounded that the action had been randomly selected and
that it was a custom to have a conferancable item.
Representative Costello WITHDREW her OBJECTION.
There being NO OBJECTION, CSHB 66(FIN) was REPORTED out of
committee with a "do pass" recommendation.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 65 CS FIN final 28-GH1799/P.pdf |
HFIN 3/13/2013 9:00:00 AM |
HB 65 |
| HB 66 CS FIN final O.pdf |
HFIN 3/13/2013 9:00:00 AM |
HB 66 |
| HB 65 - 66 Summaries Operating Budget Final.pdf |
HFIN 3/13/2013 9:00:00 AM |
HB 65 |