Legislature(1993 - 1994)

02/22/1993 01:34 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
  HSCR 2    Disapproving Executive Order No. 87.                               
                                                                               
            HSCR  2  was reported  out  of Committee  with "no                 
            recommendation" and with a zero fiscal note by the                 
            House  Finance  Committee  for  the Department  of                 
            Transportation and Public Facilities and with  two                 
            zero fiscal notes  by the House  Finance Committee                 
            for the Department of Administration.                              
                                                                               
  HOUSE SPECIAL CONCURRENT RESOLUTION NO. 2                                    
                                                                               
       Disapproving Executive Order No. 87.                                    
                                                                               
                                                                               
  REPRESENTATIVE RAMONA BARNES  gave a brief overview  of HSCR
  2.  She stated that HSCR 2 was introduced  to disapprove the                 
  Governor's    order    (EO   87)    to    transfer   leasing                 
  responsibilities  to the  Department  of Transportation  and                 
  Public  Facilities.   She  stressed  that the  Department of                 
  Transportation and Public Facilities has "repeatedly ignored                 
  the desires and mandates of the Legislature regarding budget                 
  reductions to specific programs within the Department."  She                 
  brought  to members  attention an  attached memorandum  from                 
  Legislative Finance Division dated February 10, 1993 to Rep.                 
  Eldon Mulder regarding the  FY 93 budget for the  Design and                 
  Construction components of DOT/PF (Attachment 1).                            
                                                                               
  Representative   Barnes  noted   that   the  Department   of                 
  Transportation and Public Facilities intends to  establish a                 
  sinking fund  to be  managed by  a Board  of Directors  with                 
  monies appropriated for  leasing.   She asserted that,  "the                 
  Legislature would virtually  have no control over  this fund                 
  or how it  is spent once money is transferred into it."  She                 
  pointed out that under the State of Alaska Constitution, the                 
  Legislature has sole power of appropriation.                                 
                                                                               
  KIT    DUKE,    ASSISTANT   COMMISSIONER,    DEPARTMENT   OF                 
  TRANSPORTATION AND PUBLIC FACILITIES spoke in opposition  to                 
  HSCR 2.  She  noted that an organization was  formed, Alaska                 
  State  Facilities   Administrators  (ASFA)  to   assess  the                 
  condition  of  the  State's  building  inventory.    It  was                 
  determined  by ASFA  that the  State's  deferred maintenance                 
  backlog is approximately $250.0 million dollars and that the                 
  State's  buildings  are  deteriorating  due  to  a  lack  of                 
                                                                               
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  sufficient maintenance.  There are currently eight executive                 
  branch   agencies   with    responsibility   for    building                 
  maintenance.   The Department  of Transportation  and Public                 
  Facilities has responsibility for approximately one-third of                 
  the State's buildings.  She noted that the State must comply                 
  with the Americans with Disability  Act (ADA).  She asserted                 
  that the State needs to conserve energy.  She noted that the                 
  State spends $20 million a year on energy consumption.                       
                                                                               
  Ms.  Duke  stressed that  the  State must  also  improve its                 
  management  of leased  facilities  to assure  safe,  healthy                 
  buildings.  The  Department anticipates that savings  can be                 
  found to defer expenses the State is facing.  She noted that                 
  compliance with  ADA could cost $400.0 million dollars.  She                 
  maintained that the State cannot afford to allow Departments                 
  to separately address ADA  compliance.  She asserted  that a                 
  statewide maintenance plan  must be  developed.  She  avowed                 
  that  a centralized plan would allow the State to accomplish                 
  more for the same amount of funding.                                         
                                                                               
  Representative Brown asked  the status of legislation  which                 
  is  being drafted  to  implement  an  authority.   Ms.  Duke                 
  replied that  the Department  of Law  has  produced a  draft                 
  which is being  reviewed.   Ms. Duke assured  Representative                 
  Brown  that  Legislators will  be able  to review  the draft                 
  legislation prior to a vote.                                                 
                                                                               
  Representative Brown questioned  how EO 87 will  affect land                 
  disposal.  Ms.  Duke stated  that EO 87  clarifies that  the                 
  Department  of  Transportation  and  Public  Facilities  has                 
  authority  to  purchase  and  dispose  of  land  for  public                 
  facilities.  She elucidated that the purpose of the language                 
  is to allow the Department  to acquire land for construction                 
  of public facilities.                                                        
                                                                               
  Co-Chair  MacLean  inquired  further into  the  Department's                 
  authority to acquire and  dispose land.  She noted  that the                 
  Department would have broad authority.  Ms. Duke assured her                 
  that the Department's regulation requires  due process.  She                 
  was not  aware of  any lands  that the  Department would  be                 
  disposing.   She noted  that the  Department  of Health  and                 
  Social Services  will construct juvenile  facilities through                 
  the Department of Transportation and Public Facilities.  The                 
  Department  of Transportation and  Public Facilities will be                 
  the overall authority for construction  of new facilities by                 
  other departments.                                                           
                                                                               
  Representative Hoffman  spoke  in support  of  HSCR 2.    He                 
  referred  to  problems within  his  district  concerning the                 
  Department   of   Transportation   and  Public   Facilities'                 
  maintenance of  airport facilities.   He  asserted that  the                 
  Department  has not  provided  sufficient  support to  rural                 
                                                                               
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  facilities.                                                                  
                                                                               
  Representative Brown asked  if EO  87 would change  agencies                 
  lease/purchase arrangements.  She noted that the Legislature                 
  would  have authority  over leases  of more that  $1 million                 
  dollars a year.  The Department of Transportation and Public                 
  Facilities   would   have  authority   over   smaller  lease                 
  arrangements.  This represents a  transfer of authority from                 
  the  Department  of  Administration  to  the  Department  of                 
  Transportation and Public Facilities.                                        
                                                                               
  Representative Navarre spoke in support  of a uniform policy                 
  for  cost control  and allocation of  state facilities.   He                 
  noted  that  the  Department  of Transportation  and  Public                 
  Facilities has  not received sufficient funding for deferred                 
  maintenance.  He expressed  concern with the creation  of an                 
  additional authority.                                                        
                                                                               
  Representative   Hoffman   felt  that   the   Department  of                 
  Transportation   and  Public   Facilities   has  not   given                 
  sufficient priority to rural areas.   Representative Navarre                 
  pointed  out  that  some funding  within  the  Department of                 
  Transportation and Public Facilities cannot be shifted.                      
                                                                               
  Representative Barnes and  Representative Navarre  discussed                 
  FY 93 funding to the Department of Transportation and Public                 
  Facilities' Design and Engineering Component.                                
                                                                               
  Representative Grussendorf  noted  that  the  Department  of                 
  Transportation  and Public Facilities  is the  State's "most                 
  complex  and complicated  division."    He acknowledged  the                 
  difficulty the  State has had  to clean up  the Department's                 
  accounting  for  projects  and  reappropriations.    He  was                 
  hesitant to add new authority to the Department.                             
                                                                               
  Representative Brown noted that a fact sheet provided by Ms.                 
  Duke  states  that,  "The  merger  will  prevent  additional                 
  expense to the  Budget.   It will be  less costly to  comply                 
  with  ADA and  code  upgrade requirements  with consolidated                 
  management  than  if  many   agencies  are  each  separately                 
  responsible."  Representative Brown asked  how EO 87 affects                 
  ADA  compliance.   She  noted  that an  administrative order                 
  gives authority to  agencies to comply  with ADA.  Ms.  Duke                 
  stressed that the administrative order would not be affected                 
  by   EO  87.     She  emphasized  that   the  Department  of                 
  Transportation and Public Facilities will focus and plan for                 
  ADA   compliance.     Each   agency   will  retain   overall                 
  responsibility for ADA compliance.                                           
                                                                               
  Representative  Parnell asked  for  specific projections  of                 
  cost and efficiency savings resulting from  EO 87.  He noted                 
  that the State will  expend $200.0 thousand dollars  for the                 
                                                                               
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  consolidation   of   services    in   the   Department    of                 
  Transportation and Public Facilities.   Ms. Duke stated that                 
  the Department  is endeavoring  to identify  savings to  the                 
  State.   She gave as an  example a pilot  project which will                 
  combine personnel  of four agencies to  complete maintenance                 
  projects as a  team.  She noted that the  Department is also                 
  using  FY  93 CIP  funds  for energy  management  to predict                 
  energy savings to the operating budget.                                      
                                                                               
  Representative  Barnes  asked  if agencies  other  than  the                 
  Department  of Transportation  and  Public Facilities  could                 
  perform  energy studies.   Ms. Duke  replied that  one focus                 
  point would more efficiently accomplish the task.                            
                                                                               
  Representative Navarre  reiterated his concern that there is                 
  no coordination in the statewide leasing  program.  He added                 
  that  other  factors   such  as;   down  time,  moving   and                 
  reconfiguation  costs are  not  included in  calculations of                 
  cost savings.   He gave as example  a case involving a lease                 
  by the Department of Fish and Game in Kenai.                                 
                                                                               
  Representative Therriault  observed that fiscal notes for EO                 
  87 are zero.  He asked  why fiscal notes do not reflect  the                 
  costs  involved.     Ms.  Duke  stated  that   the  proposed                 
  legislation  forming an  authority  will reflect  the fiscal                 
  costs.                                                                       
                                                                               
  NANCY BEAR-USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION                 
  spoke  in  support of  EO  87.   She  acknowledged  that the                 
  Department  of  Administration  has  had  a  difficult  time                 
  managing the State's leasing program.  She noted that leases                 
  have been  short-funded in an effort to force the Department                 
  to better manage  the program.  The  Department has analyzed                 
  the leasing program.   She  emphasized that the  procurement                 
  code and the competitive bidding process has made management                 
  difficult.                                                                   
                                                                               
  Commissioner  Usera  stressed  the need  to  coordinate  the                 
  State's leasing program.   She observed that  lease expenses                 
  are not included  as expenses  in all department's  budgets.                 
  She recommended a lease or  facility cost charge-back system                 
  to assure that departments evenly  share the burden of these                 
  costs.      She   agreed  that   both   the   Department  of                 
  Transportation  and  Public  Facilities  and  Department  of                 
  Administration have had problems in managing lease programs.                 
  She acknowledged that EO 87 would only be a first step.                      
                                                                               
  (Tape Change, HFC 93-29, Side 1)                                             
                                                                               
  Commissioner Usera  stated  that  programs  and  departments                 
  would do cost accounting on the  amount of space they occupy                 
  and overhead costs.   She emphasized that the  Department of                 
                                                                               
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  Administration supports EO 87.  If EO 87 is not accepted the                 
  Department  of   Administration  will  need   to  reconsider                 
  management  changes  to improve  the  lease and  state owned                 
  facilities program.   Commissioner  Usera did  not know  the                 
  composition of the proposed Board of Directors.                              
                                                                               
  Representative Navarre encouraged the Legislature to address                 
  the lease  and deferred  maintenance problem.   Commissioner                 
  Usera agreed with Representative Navarre.  She stressed that                 
  changes in the program's structure are needed.                               
                                                                               
  Representative Navarre  noted that the  Legislature mandated                 
  that  the Department of Transportation and Public Facilities                 
  use  FY  93  CIP receipts  for  the  Design  and Engineering                 
  component.      Representative   Barnes  asserted   that   a                 
  reappropriation occurred allowing the Department to add back                 
  $1.5  million  dollars  into   the  Design  and  Engineering                 
  Component, after Conference Committee deliberations.                         
                                                                               
  Representative  Parnell stressed  that  more information  is                 
  needed  regarding  potential   cost  savings.     Ms.   Duke                 
  emphasized  that   savings  will   be  realized  in   gained                 
  efficiencies.  She stressed that  savings cannot be assessed                 
  until  the  Department  has  an   opportunity  to  test  the                 
  consolidation effort.  She underscored  that an authority is                 
  important to guarantee accountability.   She assured members                 
  that the  Department  does not  intend  that funds  will  be                 
  outside of legislative oversight and action.                                 
                                                                               
  Ms. Duke discussed the proposed sinking fund.   She observed                 
  that monies will be appropriated to agencies.  Agencies will                 
  deposit funds for deferred maintenance  in the sinking fund.                 
  The  sinking  fund  allows  monies   for  repair  and  major                 
  maintenance  beyond  the  fiscal  year.   This  will  permit                 
  agencies   to   plan  for   major  maintenance   and  repair                 
  activities.                                                                  
                                                                               
  Ms.  Duke  clarified  that  the  State  would  only  perform                 
  maintenance  on leased  buildings  if the  State's  contract                 
  contained provisions for maintenance.   Representative Brown                 
  asked  how  rent  is  affected  by  where  the  function  is                 
  performed.   Ms.  Duke  agreed that  where  the function  is                 
  performed would not affect the rent paid.                                    
                                                                               
  Members discussed parliamentary proceedings  regarding House                 
  Special Concurrent Resolutions.                                              
                                                                               
  Representative  Hoffman  MOVED  to  report  HSCR  2  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal  note.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
                                                                               
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  HSCR   2   was   reported   out   of  Committee   with   "no                 
  recommendation" and  with a  zero fiscal  note by  the House                 
  Finance Committee  for the Department of  Transportation and                 
  Public Facilities  and with  two  zero fiscal  notes by  the                 
  House   Finance    Committee   for    the   Department    of                 
  Administration.                                                              

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