Legislature(2013 - 2014)HOUSE FINANCE 519
02/03/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| Fy 15 Governor's Budget Overview: Department of Military and Veterans Affairs | |
| Fy 15 Governor's Budget Overview: Department of Environmental Conservation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 266 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 266
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs, capitalizing funds, and making
reappropriations; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from
the constitutional budget reserve fund."
HOUSE BILL NO. 267
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program."
1:30:25 PM
^FY 15 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF MILITARY
AND VETERANS AFFAIRS
1:31:29 PM
MAJOR GENERAL THOMAS H. KATKUS, COMMISSIONER, DEPARTMENT OF
MILITARY AND VETERANS AFFAIRS, presented the Department of
Military and Veterans Affairs year-end review (video).
1:42:54 PM
Commissioner Katkus began the presentation, "Alaska
Department of Military and Veterans Affairs FY2015
Overview, February 3, 2014. Commissioner Katkus spoke to
Slide 1, "Mission":
To provide military forces to accomplish military
missions in the state or around the world; provide
homeland security and defense; emergency response;
veterans services; and youth military style training
and education.
Commissioner Katkus turned to Slide 2, "Core Services":
· Defend and Protect Alaska and the United States
· Disaster Preparedness/Response and Recovery
· Youth Intervention
· Outreach to Veterans and Military Families
Commissioner Katkus continued to Slide 4, "Measures and
Results." The slide identified two significant measures and
results that made an impact on society; one was the
graduation rates of the military youth academy, which was
comprised of drop-out, at-risk youth from civilian schools.
He shared that the department had been working to raise the
proportion of the number of people entering the school, to
the number of graduates. In 2014 the graduation rate was 85
percent.
1:44:13 PM
Commissioner Katkus discussed Slide 5, "Measures and
Results.", which was a bar graph detailing the number of
requests for assistance by Alaska veterans and the number
of request met by the Office of Veterans Services. He
pointed out that the request for assistance in 2012 was
over 20,000, in 2013 it was up 16 percent to 32,000. He
noted that the department had increased outreach to
veterans significantly.
1:45:24 PM
Commissioner Katkus discussed Slide 6, "General Fund
Budget." He directed committee attention to the black line
at the bottom of the chart on the right side of the slide.
He stated that the line was the DMVA budget relative to all
of the other departments. The chart on the left of the
slide illustrated the DMVAs share of total agency
operations. He said that the increase in numbers from 2012
through 2015 accounted for an increase in aerospace and the
monies brought in due to the change in the funding
mechanism for the youth academy; instead if interagency
transfers of funds it is now general funds. He relayed that
the line would drop as funding to aerospace was reduced
according to the department's plan.
1:46:20 PM
Commissioner Katkus discussed Slide 7, "Budget by Fund by
Group." The slide depicted three bar graphs: DMVA percent
of the total department budget by fund group (left), Alaska
Aerospace Corporation (ACC) budget by fund group (top
right), DMVA budget by fund group without ACC by fund group
(bottom right). The percentage of general funds in the
department's budget was 20 percent in FY06 and is 41
percent in the FY15 Governor's request. In FY08, $22.8
million of Alaska Aerospace Corporation Receipts were
changed to Federal Receipts to more accurately reflect
federal contracts. The Alaska Aerospace Corporation
received the following general fund increments for on-going
maintenance and operation: FY12 - $4 million (one-time,
FY13 - $8 million (one-time), FY14 - $8.1 million (on-
going). The legislature removed $26.7 million of Federal
Receipt authorization from the Alaska Aerospace
Corporation's budget in FY13.
Commissioner Katkus turned to Slide 8, "10-year plan - All
Funds." He noted that the plans in the distance for a new
armory in the Fairbanks area in the outskirts of W
1:47:32 PM
Commissioner Katkus discussed slide 9: "10 year plan GF."
He stated that the 2 significant that would see an increase
were facilities, the first was the US Property and Fiscal
Office, second was the Fairbanks Readiness Center. He
turned to Slide 9, "10-Year Plan-GF. He relayed that the
priorities for those fund would be the Alcantra 100-man
Barracks and the Fairbanks Readiness Center.
1:47:53 PM
Commissioner Katkus discussed slide 10: "Priority Issues":
· Continuing Department of Defense budget and military
force reductions as global was on terror subsides
· Base Realignment and Closure
· Fairbanks Cemetery Land
· Arctic Disaster Response and Recovery
Commissioner Katkus discussed the priority issues.
1:51:52 PM
Co-Chair Stoltze asked what the graduation rate would have
been for the students entering the academy this year.
MCHUGH PIERRE, DEPUTY COMMISSIONER, DEPARTMENT OF MILITARY
AND VETERANS AFFAIRS, replied that the graduation rate
would have been zero as all of the students of the academy
were drop-outs. He stressed that the academy was those
students last chance to get back on track. He furthered the
academy would do everything it could to establish small
successes and teach the cadets how to build on those
successes.
Commissioner Katkus added that academy was located on Joint
Base Elmendorf-Richardson (JBER) which allowed for the
support of on-sight mentors.
Co-Chair Stoltze praised the Challenge Academy.
1:55:50 PM
Co-Chair Stoltze asked about the food security
appropriation in the capital budget of $3 million.
Mr. Pierre stated that a year ago the department went out
for an RFP to get an all-inclusive response to emergency
food and food security in general. He said that the
department was seeking shelf-stable food that would be
reliable for the next 10 to 20 years. He relayed that the
state had a robust agricultural communities with many
stores and the food purchased for disasters it was not
shelf-stable food, it was perishable food that communities
were used to eating so that they felt like their regular
routine was being met. He said that part of the governor's
initiative to be better prepared over all was to assure
that the state had water purification capabilities,
electrical generation capability and an emergency food
stash, with the goal of feeding 40,000 people for 7 days in
the case of a dire emergency. He said that the original
request had been broken down into sections. He relayed that
the bid for the contract closed that day and it was
expected that they would purchase the first amount of food
within the next few weeks.
1:58:03 PM
Commissioner Katkus added that both the power generation
and water purification resources had been utilized already.
He stressed that the food element was meant for a
catastrophic event.
1:58:50 PM
Co-Chair Stoltze asked if the large generator purchased by
the American Legion/Lion's Club in Peter's Creek could be
added to the inventory of emergency service facilities.
Commissioner Katkus stated that he was unaware of the
issue.
Mr. Pierre commended the Lion's Club in Peter's Creek for
being proactive. He explained that the way emergency
response worked in Alaska was that each community
designated shelters that were capable of taking care of
people.
2:01:38 PM
Representative Gara asked if the department had the ability
to expand the youth academy to accommodate more students.
Commissioner Katkus replied yes. He added that most of
youth program in different states relied mainly on federal
dollars. In Alaska more state dollars were put in to the
program than federal dollars. He said that because federal
dollars were involved there were very specific rules and
regulations that needed to be followed. He stressed that
within the resources that the department received, they
were providing the results that they sought.
2:04:11 PM
Mr. Pierre added that there were several obstacles that
would need to be addressed that would require a large
general fund investment; a lack of barracks space and a
lack of dining hall facility. He said that accommodating
more kids would take more funding.
Representative Gara spoke to the 2000 foster children in
the state. He anticipated that their graduation numbers
were not great. He said that foster youth were occasionally
referred to the academy, and wondered whether the
department actively reached out to the Office of Children's
Services (OCS) in order to get foster youth into the
program.
Mr. Pierre replied that the department actively worked with
OCS and the Department of Health and Social Services to
make sure that as many eligible applicants were found as
was possible.
2:06:45 PM
Representative Thompson understood that some of the
students at the academy were there not because they had
dropped out, but because of discipline problems at home.
Mr. Pierre responded that by law the student must be a
drop- out. He said that the parent had to register the
student as a drop out before they could join the program.
Representative Thompson queried the accomplishments of the
aerospace program.
2:07:56 PM
Mr. Pierre stated that he and Commissioner Katkus were
heavily involved with making sure that the corporation
performed to the expectations of the department and the
legislature.
2:09:01 PM
JOHN KRAMER, ALASKA AEROSPACE CORPORATION, related that in
2013 the legislature had put some requirements on the
corporation, one of which was to secure a commercial launch
contract, multiple year, and prior to July 1, 2013. He
relayed that failure to do so would result in the reduction
of the general fund allocation. He shared that an agreement
was in place that was multi-year and that there were other
plans that were moving forward that were confidential.
Representative Thompson asked whether the next scheduled
launch as offsetting the aerospace budget.
Mr. Kramer replied that the corporation took a 25 percent
budget reduction in FY14, which was directly related to the
contracts that they were able to secure.
2:10:55 PM
Co-Chair Austerman asked if the multi-year began with the
2014 launch. He recalled that the contract had been in
place for some time.
Mr. Kramer replied that the contract had been signed in May
2013. He relayed that the work would be completed until FY
15.
2:11:40 PM
Co-Chair Austerman restated his question. He asked if there
were other contracts for additional launches.
Mr. Kramer responded that there were negotiations going on
for additional launches, but there were no signed contracts
to date.
2:12:52 PM
Vice-Chair Neuman spoke of the Pentagon's decision to use
Alaska as the site to launch an alternative fuels program,
which AIDEA was working on. He asked how such a facility
could protect from JBER closing.
Commissioner Katkus stated that he could not talk about the
active duty bases. He relayed that most of the current
relevancy from the bases in the state was driven by
operations their requirements.
2:14:11 PM
Mr. Pierre added that experimentation was not the leap to
security. He said that once the fuel security was verified
then the fuel security would be important. The Department
of Defense would rank the base based on how well it could
accommodate its needs. He asserted that having a lot of
fuel was helpful to the state; however, currently that fuel
was not as helpful because it had not been proven.
Vice-Chair Neuman stated that all platforms were certified.
Vice-Chair Neuman asked about the federal funded native
hospital in Wasilla. He believed that it was large enough
to provide better medical services for veterans.
Commissioner Katkus stated that the issue was one of the
initiatives being worked on. He believed that the facility
was perfect for accommodating veterans.
2:17:27 PM
Representative Gara asked about the contract for the multi-
year rocket launch. He wondered how many years were under
contract.
Mr. Kramer clarified that he had a multi-year contract in
place, which had led to an upcoming launch. He furthered
that within the next few weeks he would have another
contract for additional services for a future launch. He
said that one of the areas of pursuit, the range safety and
telemetry system, was unique and state of the art. He
relayed that there were a number of entities contracting
with the corporation for the use of the system, one of
which was SpaceX.
Representative Gara wondered was the next year that the
corporation had a launch contracted for.
Mr. Kramer replied that he did not have another launch
contract in place.
2:19:26 PM
Representative Gara understood that the corporation had a
multi-year contract that had one definite launch. He asked
how much money the corporation received in capital and
operating monies in FY14, versus income; additionally, in
FY15 what the proposed capital and operating budgets were
as well as the anticipated income.
Mr. Kramer replied that the projected FY15 operating
request was $6 million; FY16, $4 million; FY17, $2 million.
He said that the capital needs for FY15 was $1.8 million
and he believed that the number would decline in the out
years.
2:20:48 PM
Representative Gara understood that for the coming year the
corporation had $7.8 million. He requested the anticipated
income that would off-set the $7.8 million.
Mr. Kramer estimated $2.5 million.
Representative Gara surmised that there was a roughly $5
million loss in 2014. He queried the difference between
capital and operating grants versus what was off-set by
income in 2013.
Mr. Kramer asked for the question to be clarified.
Representative Gara said that we wanted to know the
difference between income and what the state had given the
corporation in operating and capital dollars.
Mr. Kramer explained that state monies were used for
operations and sustainment for the corporation. In addition
to the money given by the state, all of the contract work
done by the corporation off-set what it would normally cost
to operate and maintain launch activities. He said if the
budget were to be reduced by letting staff go they would
not be able to meet the need of their customers. He said
that the corporation saw approximately $2.5 million in
income in 2013, $8.1 million in operating funds and
$500,000 in capital funds.
Commissioner Katkus pointed out to the committee that some
of the sustainment costs were borne by the federal
government on some of the launch complexes. He said that
currently the aerospace directors had worked to level the
costs. He stated that most of the contracts had a basis of
support by a larger entity. He asserted that a black and
white explanation of gains and losses could be used, but
was not wholly accurate.
2:24:34 PM
Representative Thompson wondered whether the corporation
had a public relations department that communicated with
the City of Kodiak in order to assure that there was
positive economic impact to their being there. He expressed
that the people of Kodiak had characterized the corporation
as less than friendly.
Mr. Kramer replied that the operation was lean as far as
employees were concerned. He admitted that there was more
that the corporation could do in the Kodiak community to
show what was contributed through employment efforts. He
said that Kodiak would see an influx 200 to 300 people a
month or so prior to the launch date. He added that more
people would be brought prior to that for set up, roughly
75 to 100. He noted that all of the people coming in would
spend money in the community.
Representative Thompson asked if the corporation
prioritized buying and hiring local.
Mr. Kramer replied that they corporation purchased locally
as much as they could.
2:27:10 PM
Co-Chair Austerman said that Chena Hot Springs had decided
to build a housing facility in the area. He whether the
corporation had paid a retainer for the private contractors
to be available for the launch. Mr. Kramer replied yes.
Co-Chair Austerman asked how much the retainer was per
month. Mr. Kramer said it averaged $120,000 per year.
Co-Chair Austerman asked whether the corporation had been
in discussions with the owner purchasing the facility. Mr.
Kramer said that the contract had just been opened and that
it was currently being renegotiated.
Co-Chair Austerman asked whether the contract was to
continue to rent or to purchase. Mr. Kramer replied the
contract was to rent.
Co-Chair Austerman understood that there was no
negotiations underway for the purchase of the facility. Mr.
Kramer replied no.
2:28:26 PM
Representative Guttenberg queried the history of past
launches.
Mr. Kramer replied that there had been launch three years
ago. He added that the complex had launched 16 successful
launches.
Co-Chair Austerman stated that the corporation planned to
get contacts for a long term facility or to faze themselves
out. He hoped that there was a business plan that involved
launches 3 to 5 times per year that made the facility
viable, but that at the rate things were going it seemed
doubtful. He said that the corporation was on notice to
make it work or get state money out of the business.
2:29:54 PM
SUSAN COLLIGAN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
^FY 15 GOVERNOR'S BUDGET OVERVIEW: DEPARTMENT OF
ENVIRONMENTAL CONSERVATION
2:31:07 PM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, introduced department staff. He provided the
PowerPoint presentation, "Department of Environmental
Conservation: House Finance Overview" (copy on file). He
spoke to Slide 2, "DEC's Mission":
· Protect human health and the environment.
Commissioner Hartig shared that the increasing lifespan of
humans can be attributed to clean water, safe food and
sanitation. He pointed to Slide 3, "Environmental Quality
and Public Health":
Water and Sanitation is one of the primary drivers of
public health. I often refer to it as "Health 101",
which means that once we can secure access to clean
water and to adequate sanitation facilities for all
people, irrespective of the difference in their living
conditions, a huge battle against all kinds of
diseases will be won.
Dr. Lee Jong-wook,
Director-General, World Health Organization
November 2004
Commissioner Hartig turned to Slide 4, "What Alaskans Get
for Their Money":
According to calculations by Legislative Finance,
DEC's FY2015 general fund budget is equal to $153 per
year per resident worker: that's just 42¢ a day for
clean air to breathe, clean water to drink, safe food
to eat, responsible resource development, and pristine
land and waters.
2:34:31 PM
Commissioner Hartig continued to Slide 5, "Responsibilities
& Functions":
· Develop standards
· Issue permits
· Provide compliance and financial assistance
· Safeguard the quality of food and seafood
· Operate the State Environmental Health Lab
· House the Office of the State Veterinarian
· Respond to spills of oil and other hazardous
substances
· Regulate pesticides and certain types of use
· Educate and assist the public
· Interact with our federal agency counterparts
· Investigate violations and enforce state law
2:36:48 PM
Commissioner Hartig spoke to Slide 6, "Divisions":
· Administration
· Air Quality
· Environmental Health
· Spill Prevention and Response
· Water
Commissioner Hartig turned to Slide 7, "Division of
Administration":
Commissioner: Larry Hartig
Deputy: Lynn Kent
Director: Tom Cherian
Components:
· Commissioner's Office
· Administrative Services
· Information Services
· Financial Services
· Budget Services
· Procurement & Building Management
· Environmental Crimes Unit
· State Support Services
· Lease & Contracts
Challenges & Opportunities:
· Unfunded Administrative Cost Increases
· Succession Planning and Workforce Development
· Technological Advancements and Efficiencies
Commissioner Hartig explained that the Environmental Crimes
Units consisted of two people who had gone through the
trooper academy and who worked closely with the Attorney
General's office on investigations. He said that there were
sharp distinctions between constitutional rights and the
procedures that existed under criminal and civil law, which
made it important that the people in the criminal division
be specially trained. He highlighted that the operating
budget request proposed by the governor was completely
flat.
2:40:33 PM
Commissioner Hartig turned to Slide 8, "Division of Air
Quality":
Director:
Alice Edwards
Components:
· Director's Office
· Air Quality
· State Implementation Plan
· Permitting
· Monitoring
Challenges &
Opportunities:
· Fairbanks Air Quality
· Change to Federal Funding Formula
· New Federal Standards
Commissioner Hartig discussed the variety of areas
monitored by the department. He said that the department
was working on controlling air quality in Fairbanks, while
still recognizing that people needed affordable ways to
heat their homes. He spoke to the proposed change in the
federal funding formula. He said that the money was going
to be reallocated among the states and that the
northwestern states would be hit especially hard; a 42
percent decrease, spread out by 5 percent per year. He said
that that the department was constantly struggling with new
environmental standards set by the Environmental Protection
Agency.
2:44:47 PM
Commissioner Hartig discussed Slide 9, "Division of
Environmental Health":
Director:
Elaine Busse Floyd
Components:
· Director's Office
· Food Safety & Sanitation
· Laboratory Services
· Drinking Water Oversight
· Solid Waste Management
Also:
· Building Maintenance & Operations -
· Environmental Health Lab
Challenges &
Opportunities:
· Complex EPA Rules & Reduced Federal Funding
· High Risk Food Safety Inspections
· Unique Laboratory Technology & Equipment Needs
Commissioner Hartig spoke to the challenges of food safety
and sanitation as it related to seafood.
2:48:29 PM
Commissioner Hartig continued to Slide 10, "Division of
Spill Prevention and Response":
Director:
Kristin Ryan
Components:
· Director's Office
· Industry Preparedness & Pipeline Operations
· Prevention & Emergency Response
· Contaminated Sites Program
· Response Fund Administration
Challenges &
Opportunities:
· Declining Prevention Account Balance
· Increasing Workload Associated with Natural
Resource Development
· Increasing Arctic Activity
Commissioner Hartig shared that companies had to provide
proof of a financially backed, spill response plan. He
relayed that spill drill were conducted several times per
year. He related that under federal and state law the party
responsible for spills wad the owner operator of the
facility from where the spill occurred; the state oversaw
the response to assure timely containment and clean-up. He
noted that if the responsible party was doing an
unacceptable job, or was financially incapable, the state
would step in and assist in the response.
2:52:28 PM
Commissioner Hartig discussed Slide 11, "Division of
Water":
Director:
Michelle Hale
Components:
· Water Quality
· Facility Construction
· Village Safe Water Program
· Municipal Grants & Loan Program
Challenges &
Opportunities:
· 404 Dredge & Fill Permitting Evaluation Pace
· Declining Federal Funding in the Village Safe
Water Program
Commissioner Hartig relayed that water quality standards
were set through a public process and that the 3 areas of
focus at the moment were: mixing zones, anti-degradation,
and fish consumption values. He discussed ongoing research
with the Department of Natural Resources concerning the
pros and cons of state taking over the section 404 Dredge &
Fill Permitting program.
2:54:17 PM
Commissioner Hartig spoke to the Village Safe Water
program. He relayed that the program was 75 percent
federally funded and 25 percent state match and municipal
grants.
2:54:54 PM
Commissioner Hartig discussed slide 12, "FY2015 Budget
Request." He reiterated that the request for FY15 reflected
zero percent growth, zero percent general fund increase and
no new PCNs. The operating request was $88,587.5 million
and the capital request was $69, 347.7 million, the lowest
capital request since FY06.
Commissioner Hartig discussed Slide 13, "FY2015 Operating
Budget by Fund Source." The slide contained a pie chart
that features a breakdown in funding percentages: DGF
Oil/Hazardous Release Prevention and Response Fund
(Representative Foster), 18 percent; Federal Receipts
(FED), 28 percent; UGF (General Fund & General Fund Match),
27 percent; DGF (GFPR, OR Fees, CPVF), 13 percent.
Additionally, the slide provided a bar chart that broke
those percentages down into the divisions; Administration,
Environmental Health, Air Quality, Spill Prevention &
Response, and Water Quality.
2:57:39 PM
Commissioner Hartig turned to Slide 14, "Concerns and
Updates":
· Significant Concerns
o Prevention Account Sustainability
o Village Safe Water
ƒFederal Funding Decline
ƒAlaska Challenge Project
· Updates
o Tsunami Debris Cleanup
o Federal Sequestration & Future Outlook
2:57:56 PM
Commissioner Hartig continued to Slide 15, "How the
Response Fund Works":
· "It is the intent of the Legislature and declared to
be the public policy of the State that funds for the
abatement of a release of oil or a hazardous substance
will always be available." (A.S. 46.08.030)
· Response Account
o Funded by 1¢ surcharge on each barrel of oil.
o Surcharge suspended when fund exceeds $50
Million.
o Pays for emergency response activities.
o Department recovers costs from identified
responsible parties.
· Prevention Account
o Funded by a 4¢ surcharge on each barrel of oil.
o Pays for operational costs and readiness
activities within the Spill Prevention & Response
Division.
2:58:30 PM
Commissioner Hartig discussed Slide 16, "Status of the
Prevention Account", which contained a bar graph that
illustrated Prevention Account revenues, expenditures, and
balance projection. He relayed that the light green was the
balance in the fund; at one point it had been above $20
million. The purple bar in FY14 represented cost recovery
against British Petroleum on an arbitration for several
spills in 2006. He said that the red line that traveled
across all of the bars was the total annual expenses, which
was level in FY10 through FY13, dropped in FY14, and
leveled out again. He said that the green bars went to zero
in FY16 and were replaced by blue bars representing general
fund increments. He explained that as oil production went
down the response fund balance went down because there was
not enough to cover the $17 million per year of the spill
prevention operating budget.
3:00:53 PM
Commissioner Hartig shared that Slide 17, "Status of the
Prevention Account" provided the figures for the previous
slide. He noted that going into the out-years the inputs
into the response fund, line items 3 thorough 5, were
projections based on variable that were subject to change.
3:01:46 PM
Commissioner Hartig turned to Slide 18, "Prevention Account
and Inflation." He hoped that the graph dispelled myths
that the fund was down because of overspending. He asserted
that the rate of inflation from FY05 through FY15 had risen
more than the operating budget for spill prevention and
response. He relayed that the surcharge on a barrel of oil
had not changed with the per barrel price.
3:03:28 PM
Commissioner Hartig discussed Slide 19, "Rural Alaska Water
and Sewer." The graph included 2 types of needs: First time
service for homes without piped or covered haul and
Upgrades or replacement to address significant health
threats. He stated that the bars showed the federal and
state funding for the program and that the decline over the
last nine years was 66 percent or $61 million. He stated
there were harder to serve communities in the state that
still did not have first-time service and some of the
projects were decades old. He recalled that the capital
budget proposal for FY15 was approximately 60 percent new
projects and 40 percent existing facilities.
Commissioner Hartig discussed Slide 20, "Village Safe
Water: The Alaska Challenge":
· $667 Million = Current Cost of unfunded significant
health related water and sewer needs in rural Alaska.
· State/Federal funding insufficient to construct new
systems or ensure continued functionality of aging
systems.
· Alaska Challenge Project
o Innovative and new approaches are needed in
Alaska villages in order to cut capital and
operating costs of providing running water and
sewer.
o Issues a challenge to the private sector.
o Three-Phased Approach:
ƒPhase 1: Request For Proposals (RFP) and
selection for funding.
ƒPhase 2: Demonstration of projects, research
and development.
ƒPhase 3: Initial pilot testing and
refinement for implementation.
o The Legislature funded Phase 1 in FY2013, and the
Department is working with stakeholders to try to
secure funding for Phases 2 & 3
3:07:23 PM
Co-Chair Austerman stated that additional issues could be
brought up during subcommittee work.
Vice-Chair Neuman asked about Slide 25, which listed
appropriations within the department. He noted that the
administration cost had increased by $2 million over the
last 4 years. He asked how much of the increase was a
charge back from the Department of Administration for data
storage and other services.
THOMAS CHERIAN, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, replied
that he would provide the information to the committee at a
later date.
3:09:11 PM
Co-Chair Stoltze asked about Slide 10. He wondered whether
increasing the tax or using general funds was a priority.
Commissioner Hartig replied that a large could occur at the
end of FY 15. He said that there were cost recoveries that
might extend the programs for another year. He offered that
the option was finding another revenue source. He had laid
out options for the cutting that had been looked at in the
past. He noted that the potential options were listed
starting on page 4 of the January 21st, 2014 response (copy
on file). He said that many options were being explored.
3:12:46 PM
Commissioner Hartig said that one of the thing that the
department had done to extend the life of the fund was to
stop using money out of the provision account to pay for
the clean-up of state owned or state managed contaminated
sites. This began several years ago and the department had
begun putting in capital requests of $3 million per year to
clean up the list of $50 million worth of clean-up on state
owned sites. He related that $17 million had been spent on
state owned sites and one option would be for the
legislature to replace those funds. He said that general
fund appropriations had been the most recent way to fund
the gap.
3:14:54 PM
Co-Chair Stoltze contended that the fund had risen to what
was far from the agreed upon number sold during the
legislative process at the fund's inception.
Commissioner Hartig replied that this year would be tight
and without a change in the formula, the department would
be back to the legislature next year for an appropriation.
3:17:00 PM
Representative Wilson asked about grant authority for
programs dealing with air quality.
Commissioner Hartig replied that the grant authority for
the Air Division had sunsetted. He said that grants had to
be found through other state agencies, or were given
directly to communities.
Representative Wilson asked about federal or EPA grants.
She wondered about bush Alaska was missing out on funds.
Commissioner Hartig did not believe that the state would
miss out on federal money. He thought it might be difficult
for communities to realize the grants for themselves and
that the department could provide guidance.
3:19:56 PM
Representative Holmes asked about Slide 16 and the $5-$7
million general fund request for FY16. She expressed
concern that there would not be funds in the future to pay
for oil spill and prevention given the state's current
economic climate.
Commissioner Hartig echoed the same concern. He added that
the issue should be of no surprise to the legislature or
the department.
3:22:23 PM
Representative Gara opined that the state had the choice of
$7 million per year more out of the general fund or adding
4 cents of a surcharge on oil selling for $105 per barrel.
He asked whether the 4 cents could have an impact on
investment or production.
3:23:19 PM
Commissioner Hartig replied that he had no opinion on the
matter.
Representative Gara asked if the oil industry had been
asked whether it would make a difference in their
investment.
Commissioner Hartig said that the concept had been
discussed.
3:24:38 PM
Co-Chair Austerman said that a refined products tax would
need to be imposed to take care of cleaning up refined
product. He wondered what would need to be done in order to
get the department back into a positive cash flow.
Commissioner Hartig replied no. He felt that there were
different ways to approach the problem. He said that with
declining oil production the gap would increase over the
years, which left two options: adjust the surcharge
accordingly, or take a 10 year outlook. He shared that the
surcharge on crude oil could be projected 10 years, but
refined products would prove more difficult.
Co-Chair Austerman commented that for most cases the
current administration had been anti-tax. He wondered
whether the refined products tax would pass the veto.
3:28:04 PM
Representative Guttenberg asked about reimbursable in the
clean-up account. He wondered why responsible parties were
not charged in spill cases.
Commissioner Hartig replied that after the department
responded to a spill, cost recovery was sought against the
responsible party. He said that the money that was
recovered went into a separate account which was
appropriated by the legislature back into the response
account.
Representative Guttenberg spoke to Slide 17. He asked what
the $17 million in FY12 represented.
Commissioner Hartig stated that the $17 million related to
state managed sites. He noted that the department
maintained that the clean-up was prioritized in terms of
human health risk. He said that the sites represented were
all sites where the state had the responsibility for clean-
up.
3:31:29 PM
Co-Chair Stoltze asked what industry had been most
responsible for the top 10 spills in the last 5 years.
Commissioner Hartig responded that the primary product that
had been spilled was diesel. He stated that the spill could
occur from multiple sources. He said that there were
approximately 2000 spills per year and the number of spills
from regulated facilities was declining. He shared that
2013 saw more spills of processed water from a mining
operation. He thought that more money was spent on
preventing oil industry spills. He offered to provide a
breakdown of product and industry to the committee.
Co-Chair Stoltze looked forward to receiving the
information.
3:34:44 PM
Co-Chair Austerman asked about 404 permitting. He asked how
much money had been put in in 2013 to state the process.
Commissioner Hartig replied approximately $300 thousand.
Mr. Cherian added that $1.4 million had been appropriated
for FY14, and had been divided among the Department of Law,
the Department of Natural Resource and the Department of
Environmental Conservation.
Co-Chair Austerman ask whether there was a request for 404
funds this year.
Commissioner Hartig replied no.
Co-Chair Austerman asked whether it would bring back a
recommendation.
Commissioner Hartig responded that the department would be
able to progress on the recommendation. He said that if the
department did not come back for additional increments in
line with the fiscal note the department would not be in a
position to implement the program quickly.
3:36:44 PM
Representative Munoz said that she would report back to the
committee on DEC sub-committee activities.
Representative Edgmon requested more information regarding
the Village Safe Water Act and the Alaska Challenge.
3:37:28 PM
Representative Gara asked whether money paid to the state
for spills went into the 470 fund.
Commissioner Hartig replied that the response account would
see 1 cent and the prevention account would see 4 cents. He
said that that oversight included more than crude oil
facilities and that oversight of crude oil facilities
benefitted the downstream users. He reiterated that cost
recover was only on the 1 cent.
Co-Chair Austerman discussed housekeeping.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DMVA FY2015 Department Overview Feb 3 2014.pdf |
HFIN 2/3/2014 1:30:00 PM |
DMVA Overview HFC |
| DEC Presentation for HFC Overview 2015 1.31.2014 (reduced size).pdf |
HFIN 2/3/2014 1:30:00 PM |
DEC Budget OVerview HFIN |